Incorporation in British Columbia: Is It Right for You?
If you're running a business in BC — whether as a sole proprietor, freelancer, or partnership — you've likely wondered whether it's time to incorporate. As business lawyers in Surrey, we help entrepreneurs make this important decision every day.
Benefits of Incorporation
- Limited liability protection — Your personal assets (home, car, savings) are generally protected from business debts and lawsuits
- Tax advantages — The small business corporate tax rate in BC is just 11% (combined federal and provincial) on the first $500,000 of active business income, compared to personal rates of up to 53.5%
- Income splitting — Pay dividends to family members who are shareholders (subject to tax on split income rules)
- Credibility — An incorporated business often appears more professional to clients, suppliers, and lenders
- Perpetual existence — The corporation continues even if shareholders change
When Incorporation May Not Make Sense
Incorporation isn't ideal for every situation. If your business earns less than $50,000 annually, the administrative costs of maintaining a corporation (annual filings, corporate tax returns, bookkeeping) may outweigh the benefits. Solo consultants who withdraw all profits as salary may see limited tax savings.
The Incorporation Process in BC
Our Surrey business lawyers handle the full incorporation process:
- Name search and approval through BC Registries
- Drafting Articles of Incorporation
- Creating shareholder agreements
- Setting up the corporate minute book
- Registering for GST/HST and payroll accounts
Federal vs. Provincial Incorporation
You can incorporate federally (under the Canada Business Corporations Act) or provincially (under the BC Business Corporations Act). Provincial incorporation is simpler and less expensive, while federal incorporation provides name protection across Canada. Most small businesses operating primarily in BC benefit from provincial incorporation.