Benefits of Incorporating an Alberta Company

Contact Neufeld Legal PC for your incorporation legal work at 403-400-4092 or Chris@NeufeldLegal.com

There are numerous reasons for incorporating your business, nevertheless, before we look at what some of those reasons are, we should address some of the fundamental realities of incorporation. Incorporation is but a singular facet of your business' legal configuration. It cannot be viewed in a vaccuum, where a certain expectation linked to incorporation will invariably be the result in every situation. As with everything else, the benefits of incorporation are impacted by a multiplicity of external forces, which often negate the benefits associated with incorporation. As such, an anticipated benefit can be negated (often without your knowledge) by other actions and laws, such that the benefits you have read about or been advised upon may not be available to yourself. Unfortuantely, this is the reality of corporate law, and the rationale for your understanding the broader realities of the law.

Two of the primary impediments to your realizing the anticipated benefits of incorporation are the law and subsequent contractual arrangements that you enter into. Statutory law puts clear clear legal constraints on the corporation, as is evident in the Alberta Business Corporations Act (and the Canada Business Corporations Act for federal companies). Other federal and provincial statutes also impose rules and constraints on incorporated companies, as does the common law (i.e., via the principles of fraud and negligence). Meanwhile, subsequent contractual arrangements that you enter into can negate or seriously reduce the strategic benefits associated with incorporation, whether its through the requirement of personal guarantees or indemnifiers, the specific relinquishment of legal protections, or such other contractual alterations.

Nevertheless, there are potential benefits associated with incorporation, which can be extremely lucrative if properly integrated into a thriving business, including eliminating or minimizing personal liability, prospective tax advantages (i.e., tax rates and tax deferral), business perception, partnering with shareholders, structuring for investment opportunities, structuring for control, business succession planning, among others. The key, however, is that you work with skilled professionals (lawyers and accountants) such that you understand the applicability of those legal benefits, their limitations and situations that will negate or seriously reduce those benefits.

As such, when your business seeks the professional services of experienced legal counsel, whether when incorporating a new Alberta company or dealing with its ongoing corporate development, your business can look to the Calgary, Alberta law firm of Neufeld Legal P.C. Contact us at 403-400-4092 or via email at Chris@NeufeldLegal.com.

* Please note that the flat rates associated with a standard incorporation are strictly limited to a basic incorporation (provincial or federal) and does not involve other matters that might be corrollary to the incorporation process or might be atypical for a standard incorporation, including but not limited to related legal or tax advice, engagement with other governmental bodies or professional bodies, licensing, drafting of pertinent business contracts (i.e., shareholders' agreements), negotiations, disputes, financing, coordination with other companies or other legal structuring.

Limited Liability: Thelegal principle of limited liability means that a corporation is a separate legal entity from its shareholders, with this legal separation providing the shareholders with a virtual legal shield that protects the shareholders' personal assets from the debts and liabilities of the corporation. Read more.

 

Perpetual Existence: Perpetual existence, with respect to a corporation, means that the corporation's legal existence is not tied to the lives of its shareholders, directors, officers, or employees, and instead the corporation exists as a separate legal entity and can continue to operate indefinitely. Read more.

 

Tax Rates: Alberta is widely recognized as a tax-advantaged jurisdiction for corporations, with a fiscal environment designed to attract investment and foster economic growth. The tax benefits for corporations in Alberta are a key component of what is often referred to as the "Alberta Advantage." Read more.

 

Tax Deferral: Tax deferral is one of the most significant advantages of incorporating a business, enabling a corporation to delay the payment of personal income tax on its earnings, which can provide a number of benefits to the corporate shareholders. The legal concept is based on the two-tiered tax system in Canada. Read more.

 

Succession Planning: Business succession is strategically advantageous through an incorporated corporation, as it faciliates the efficient transfer ownership and, in many cases, in a tax-advantageous manner. Unlike a sole proprietorship or a partnership where the business is legally tied to the individual, a corporation is a separate legal entity. Read more.