There are many pros and cons of incorporating a small business, depending on a number of individual situations which may change as your business matures.

A key benefit to an incorporated business is that it becomes a separate legal entity, meaning your personal assets are protected should creditors or legal actions go against your corporation and its assets.

An incorporated business also has tax flexibility, which may benefit you personally. Notably, you can choose the most tax-efficient way to pay yourself, including dividends, salary, bonus or a combination.

In terms of downsides, incorporating your business can get expensive. You can technically do it on your own, but it’s often better to use a lawyer and an accountant. And then there’s the paperwork – incorporated entities must file more paperwork, including separate tax returns and various legal notifications.

As your business grows, and the realities of your legal and tax situations change, asking “should I incorporate?” again may bring a different answer.  You should talk to an accountant or tax professional to determine what’s best for you.

In the meantime, to read more about the implications and advantages, check out this article from the QuickBooks Small Business Centre .