What are the advantages of Incorporating your business?

My partner and I are starting a web design company. Is it a good idea for us to incorporate the company?

what are the advatages / disadvatages

Thanks

 

Big advantage: Limited Personal Liability

I gather from your website that your in Canada, I'm not familiar with the laws there, but in the US if your "partner" were to be on his way to a meeting with a client and get into a car accident, you could potentially be sued in civil court.

Also, in the US each partner is responsible for the full debts of the partnership. Now, you may say that you are not going to borrow money, but what if your "partner" were to take out a loan in the business name without you knowing? (and then suddenly head to aruba!) A corporation can offer protection from this in a couple of different ways.

There are many other advantages, but these are two of the biggest that stick out in my mind.

However, your best advice is to consult with a competent attorney in your area. Many will offer an initial consult for free...

 

I would recommend getting an LLC ($600 from LegalZoom) to protect your personal assets because if a client sues you, and you are covered by an LLC, they can only take your company's money

 

In Canada the advantages are

1 Personal protection.
2 Limited Liability with maximum flexibility
3 Potential personal tax benefits
4 Option of employment with your own company
5 Versatility... meaning you can structure your company's
authorized capital to allow for different ways to participate in your business.

6 Multiple business names
7 Potential corporate tax benefits
8 Transfer of business to others

If you need examples let me know

 

Definately incorporate your company. People perceive corporations as being more stable than unincorporated businesses, which may gain your company more trust from customers. Corporations can also enjoy various tax advantages but the biggest advantage is that you will have limited liability.