Starting a business in British Columbia is exciting, but it can also be confusing. One of the first decisions you’ll need to make is how to set up your business. During this process, you’ll probably come across words like corporation and incorporation. Understanding what these refer to is important in ensuring you set your business up properly. In this post, we’ll break down the meanings of them all, so you can start your business with confidence.
What is a Small Business British Columbia?
A small business in British Columbia is usually a company that’s owned and run by one person or a small group. These types of businesses can be anything from a coffee shop to a cleaning service. Small businesses often start as sole proprietorships. That means one person is the owner, and they make all the decisions.
Sole proprietors are easy to set up. They don’t cost a lot of money to start, and the paperwork is simple. But the catch is that the owner is responsible for everything. If the business gets into debt or trouble, the owner has to deal with it personally.
What is a Corporation?
On the other hand, a corporation is a type of business that is its own legal person. That means it can buy things, owe money, and make deals, separate from the people who started it. If you start a corporation, you become a shareholder. This protects your personal money and belongings if the business has problems.
Setting up a corporation costs more and takes more paperwork. But it can help your business grow in the long run. Banks and investors often take corporations more seriously because they look more professional.
What is Incorporation?
Incorporation is the process of turning your business into a corporation. In British Columbia, this means registering with the government and following certain rules. Once your business is incorporated, it becomes a new legal entity, separate from you.
Some people start as small businesses and choose to incorporate later. Others start as corporations right away. It depends on your goals, how much risk you want to take, and how big you want your business to grow.
There’s no one right way to start a business. Some people feel good starting small and keeping things simple. Others want to go big and protect themselves by incorporating. If you’re unsure, talking to a business advisor or a lawyer can help you decide. Contact us today to learn more about setting up your own business. We’d be happy to help!
FAQ on Starting a Small Business British Columbia
Can I turn my small business into a corporation later?
Yes, many people start small and choose to incorporate when their business grows.
Is it cheaper to stay a small business?
Usually, yes. Starting as a sole proprietor has lower costs and fewer rules.
Will I make more money as a corporation?
Not always, but corporations can offer tax benefits and more chances to grow.