Deciding whether to incorporate federally or provincially is a critical question that most entrepreneurs face during the first few years of their establishment. The type and the method of your incorporation determine the structure of your organisation, the functioning of its board of shareholders and the method of its taxation.
Hence, it is crucial for young business owners to incorporate their company at the opportune time under the right type of legislations that are most suited to its operations. Although federal incorporation offers many benefits to companies, it might not be the ideal setup for many business modules. Based on the scale of your operations and the nature of your product and services, an experienced corporate lawyer can help you decide the right system of incorporation for your business.
To aid the decision making process, here’s a closer look at the benefits of incorporating in Alberta:
1) Ease of Business Name Selection
Irrespective of the type of your incorporation, you need to select a distinctive business name for your organisation which is also descriptive of your services. This makes the process of provincial incorporation easier for your business. As the scope of verification is limited to the province of your operation, the selection of name is relatively speedier. Consulting a corporate lawyer can help you review the NUANS report thoroughly and select a unique name for your business.
2) Lower Incorporation Cost
Although the cost of provincial registration is relatively higher than federal, most provincial incorporations do not entail any annual filing fee. Costs associated with the filing and renewal of your articles of incorporation is also lower for most provincially enlisted organisations. It is recommended to refer to your corporate lawyer to determine the accurate incorporation cost for your business.
3) Limited Liability
Incorporating your business provincially establishes it as an entity separate from its owner and limits your liability in the organisation greatly. Since, provincial registration grants a business an individual identity, the proprietor cannot be held liable for the debts incurred and is taxed as a separate individual.
4) Tax Benefits
All businesses located and operational in the province are taxed under the Alberta Corporate Tax Act. The province of Alberta asserts the lowest amount of taxation in the country, offering businesses lower rates of income tax and exemption from capital, general sales and payroll taxes. Hence, incorporating provincially can allow businesses to optimize their tax returns significantly.
The province of Alberta offers Canadian-controlled private corporations, which are not associated with any other group, access to a small business deduction on the income incurred during its active operation. Small businesses with an income threshold below $500,000 can claim these rebates under the Alberta Corporate Tax Act. Consulting a skilled corporate lawyer can help you access these deductions accurately and help your business improve its tax filing.
These were a few key benefits of incorporating in Alberta. Depending on the scale of your business and the nature of its operations, a corporate lawyer can help you determine the right method of incorporation for your organisation. Consult our legal experts to know more about the process of registration.