Calgary/Canada - April 1, 2022 /MarketersMEDIA/ —
Goodlawyer’s Chief Legal Officer, Josh Weinberger discusses the differences between a sole proprietorship vs corporation in a published video. He uses the example of his young cousin setting up a lemonade stand and how that makes her a sole proprietor.
“The second my little cousin sets up her table on the street corner, fills up the cups with lemonade, and starts selling them to customers, she is a sole proprietor running a business,” said Weinberger. “That right there is the key advantage of a sole proprietorship. The startup costs are limited. There are no forms to fill in. Set up your table, pour your juice, and start selling to customers. You’re in business.”
The ease of setup, low cost, and flexibility make many freelancers choose sole proprietorship vs incorporation. However, there are key disadvantages to consider.
“If something goes wrong with my little cousin’s business, she is at risk,” said Weinberger.
He explains that if there is a legal issue, like being sued, there is no separation or protection for the sole proprietor. The proprietor is personally responsible and can lose their business, personal property and assets.
The second key disadvantage is that sole proprietors cannot scale the business. As a sole proprietor, you have less access to resources and growth opportunities. If you want the business to grow, Weinberger suggests becoming an incorporated company vs sole proprietor.
Corporations can attract investments, shareholders and hire employees. As a corporation, you also have access to startup grants offered by municipal, provincial and federal governments. As well, banks grant incorporated businesses lower rates for borrowing money. In addition, a corporation benefits from lower tax rates than the personal income tax rate of a sole proprietor.
Another significant advantage of incorporating a sole proprietorship or a new business is liability protection. As a separate legal entity, the business becomes legally and financially responsible. If someone sues your company, you are not personally accountable, and your property and assets are protected.
“There are definitely some disadvantages with getting incorporated. There are upfront costs, there are annual maintenance fees payable, and there’s a host of rules and obligations that you have to follow for every year that you run your business,” said Weinberger.
With legal advice and assistance, the advantages of incorporating outweigh the disadvantages. If you have questions about the incorporation process, book a legal advice session with Goodlawyer.
Goodlawyer is Canada’s leading marketplace for online legal services. Goodlawyer connects new small business owners with hand-picked lawyers that love working with startups and entrepreneurs. Their business lawyers are vetted, interviewed and rated by clients to ensure top-notch legal service. Their first class service and upfront prices are changing how small business founders think about lawyers. Learn more at www.goodlawyer.ca.
Contact Info:
Name: Taylor Smith, Head of Customer Experience, Goodlawyer
Email: Send Email
Organization: Goodlawyer
Address: Calgary, AB T2J 1Y6
Phone: 1 (855) 624-2665
Website: https://goodlawyer.ca
Release ID: 89072136
