General Overview

The main purpose of incorporating a company is that it will provide you with Limited Liability. In other words it separates your personal assets from that of the corporation, making it virtually impossible for a third party, creditor or other, to attack you personally, referred to as “piercing the corporate veil”, which is the most litigated issue in corporate law, and yet it remains the least understood.

A corporation is considered to be a separate person or legal entity under the law. It will exist apart from its shareholders, directors and officers and will not be affected by their death or retirement. The corporation may own property, assume liabilities, enter into contracts, and sue or be sued.

Corporations are also given tax incentives, whereas sole proprietorships and partnerships do not qualify for this lower tax rate. The income of a sole proprietorship or partnership is taxable to the individual or individuals that own it.

Operating of a transport company in Canada, and especially in the U.S. is a very risky business, and allows for an extremely high exposure to risk. The potential for law suits relate more to insurance issues than anything else. In the event that you are involved in a serious accident, causing permanent disability or death, the courts could award considerably more than the limit of your insurance policy. This would be catastrophic if your operation is that of a sole proprietor or general partnership. The other insurance issue is that of an uninsured claim.

We take the position that because of the nature of your business, incorporating your company makes all the sense in the world. It will provide you with a greater piece of mind as well as the potential for higher profits.

The only down side to incorporating is that of the cost of filing a corporate tax return which is minuscule to the risk of losing everything you own.