{"id":1533,"date":"2019-05-02T23:20:02","date_gmt":"2019-05-02T23:20:02","guid":{"rendered":"https:\/\/ownrblog-preprod.go-vip.net\/?p=1533"},"modified":"2026-04-13T13:55:17","modified_gmt":"2026-04-13T13:55:17","slug":"when-is-the-best-time-to-incorporate","status":"publish","type":"post","link":"https:\/\/www.ownr.co\/blog\/when-is-the-best-time-to-incorporate\/","title":{"rendered":"When is the Best Time to Incorporate"},"content":{"rendered":"

Businesses in Canada can take the following legal structures: sole proprietorships<\/a>, partnerships<\/a>, corporations<\/a> or co-operatives. The decision on how to structure your business<\/a> will depend largely on your current needs and future goals. Many entrepreneurs<\/a> initially choose to structure their business as a sole proprietorship\u00a0<\/sup>because they are simple and less expensive to run, and all profits go directly to the business owner. There are also several advantages to structuring your business as a corporation and deciding to incorporate your sole proprietorship can open up new opportunities.<\/p>\n

When is the right time to incorporate your sole proprietorship? What trigger points should encourage you to think about incorporating your sole proprietorship? Here we\u2019ll take a look at three different businesses to help you take the leap from sole proprietorship to corporation.<\/p>\n

When should you incorporate a business?<\/h2>\n

1. When you need better access to business loans<\/h3>\n

Business incorporation example: Jay, the Spanish tutor is opening a school<\/strong><\/h4>\n

Jay teaches a number of students each week, and is the sole proprietor\/exclusive owner of his business – Master Your Spanish<\/em>. Over a period of time Jay has made a name for himself in the community, his student count has gone up, and he makes a good profit each month.<\/p>\n

He feels the time is right to capitalize on his credibility and expand his business. He\u2019d like to open a language school, hire other tutors, and run digital ads to sign-up new students. Jay\u2019s growth plans need investment or a business loan<\/strong><\/a>.<\/p>\n

Unfortunately, as a sole proprietor Jay may find it hard to qualify for a business loan. Banks require collateral<\/strong> like real estate, equipment, inventory, purchase orders<\/a> among others as a guarantee against a default. Without these business assets, a sole proprietor\u2019s personal assets<\/strong> will need to be put up as collateral.<\/p>\n

Lenders also want to see the business generating a certain minimum annual revenue and may prefer to lend to a business that has been operational for some time. A sole proprietorship<\/a> may or may not be able to show consistent income and work-orders.<\/p>\n

If a business loan is not available to Jay, what are his options as a sole proprietor? He can either dip into his own savings, borrow from family and friends, start a crowdfunding campaign, seek government grants, or apply for a personal loan to use for business<\/strong>. But here\u2019s what Jay has to watch out for:<\/p>\n