For a company founder, setting up a joint-stock company has several advantages over the status of a sole proprietorship, known as “self-employed”
Since the incorporated business http://acshk.com/company-incorporation-services/ is a separate legal entity from its owners, the personal liability of the shareholders is limited to the funds invested in the corporation. Only the company is responsible for its debts and obligations.
Due to its particularity of being a separate legal entity, the incorporated company survives the death of its founder. It can also be sold to new owners.
Lower tax rate
An incorporated business is subject to tax at a reduced rate on the net income (profits) generated by its business activity. Currently, a Quebec SME is required to pay 18.5% tax each year on its first $ 500,000 of taxable business income, and 26.8% on the amount that exceeds this threshold. These rates are generally more advantageous than those that apply to an individual’s employment income.
Only earnings distributed by the company in the form of wages or dividends are taxable. Shareholders and company executives are not subject to tax as long as the company’s funds remain in the company’s bank account.
Limits to limited liability
While, in principle http://acshk.com/company-secretarial-services/ , the separation of the assets of the incorporated enterprise does not engage the personal responsibility of its shareholders, most financial institutions require a personal guarantee of the company’s liabilities, especially in its infancy. In some cases, the shareholders of the company are also the directors. However, they have a personal responsibility for certain acts of society, particularly those related to the payment of wages.