Launching a business is exciting. But before you sign your first client or sell your first product, there’s a critical decision: how should you structure your business? Whether you operate as a sole proprietor or incorporate, the choice will impact your taxes, liability, and growth trajectory.
Understanding Sole Proprietorship
- Simplicity: Quick and inexpensive to set up.
- Full Control: You make all decisions and retain all profits.
- Taxation: Income is taxed at your personal rate, which can be high if you earn well.
- Liability: No separation between your business and personal assets.
Understanding Incorporation
- Limited Liability: Your personal assets are protected if the business faces debts or lawsuits.
- Tax Planning Tools: Incorporation opens doors to strategies like income splitting and tax deferral.
- Credibility: Incorporated entities often enjoy more trust from lenders, investors, and clients.
- Complexity: Incorporation involves more paperwork, compliance, and upfront costs.
The structure of your business is the foundation of your future wealth.
When Incorporation Makes Sense
- Your business is earning more than you need personally.
- You plan to reinvest profits into growth.
- You’re looking to scale, attract investors, or eventually sell.
Plutocrat’s Expertise
Choosing between sole proprietorship and incorporation isn’t a one-size-fits-all decision. At Plutocrat, we assess your business model, revenue potential, and personal goals to recommend the structure that builds wealth fastest—without unnecessary risk.