If you’re starting a business, are you better to incorporate or proceed as a sole proprietor?
November 12, 2021
Scott Robson
Legal Moment
Legal Moment on AM 980
Transcript
| [phone ringing] | |
| Receptionist: | Cohen Highley |
| Announcer: | And now the Cohen Highley Legal Moment on 980 CFPL. |
| Announcer: | I’m with Scott Robson from Cohen Highley Lawyers. If you’re starting a business, are you better to incorporate or proceed as a sole proprietor? |
| Scott Robson: | Arguments can be made for both, but sole proprietorships do not have incorporation costs or the additional expenses corporations bring. Additionally, if you have startup costs and the business is a side hustle, a sole proprietorship likely lets you write off those costs against your personal income. Sole proprietors are exposed to more liability, however. |
| Announcer: | And incorporation? |
| Scott Robson: | Corporations are separate legal entities. They offer insulation from risk, but if you incur startup or other expenses and never turn a profit, you cannot write off those expenses against your personal income like you can as a sole proprietor. Every situation is different. Generally speaking, where the business is more of a side hustle or solo venture lean towards a sole proprietorship. If you anticipate the business hiring employees and generating substantial income immediately consider incorporation. Consulting a lawyer can help inform that decision. |
| Announcer: | Thanks, Scott. This has been the Cohen Highley Legal Moment. |
| Announcer: | |
| [Music] | |
| Singers: | Cohen Highley, we’re listening. cohenhighley.com |
