Sole proprietorship comes with a host of advantages. Before choosing to become a sole proprietor, it is important to understand the significance of proprietorship. Canada has a friendly business environment which makes it simple and easy to set up a sole proprietorship in the country. Let’s take a closer look at the various advantages of having a sole proprietorship set up in Canada.
1. Low Starting-Up Costs
Setting up a sole proprietorship business in Canada is simple. The costs for starting up are minimal. Most of the start-up costs include buying and setting up expenses for essential items like computer, software, products, etc. Lower taxes and inexpensive registration requirements make business structure one of the best options for setting up a business in Canada. Registration requirements for starting up a sole proprietorship business in Canada include a business license, a certificate of compliance, a business name and number, tax registration, etc.
2. Tax advantages
There are several tax advantages for a sole proprietor in Canada. The tax rate for a sole proprietorship is lower compared to a corporation. Check out this website for Canada tax brackets.
The income of a sole proprietor is reported on a personal income tax return form. Unlike other business structures, a sole proprietorship doesn’t need you to file business taxes separate from your individual return. It saves a lot of your time and money by eliminating the process of filing a separate business tax return. There is no requirement for a Government Sales Tax/Harmonized Sales Tax registration number for your sole proprietorship business until your business reaches $30,000.00 in sales.
One of the most beneficial factors of a sole proprietorship is that you get full control of your company. Decisions related to cost and direction of the company is entirely up to you. In addition to this, you don’t have to deal with any co-owners or Board of Directors. Besides, you have the freedom and the ability to sell or dissolve the business at your will.
4. Employment benefits
Sole proprietors can hire employees. This can give them tax benefits from job creation, such as tax breaks. Another employment benefit of a sole proprietorship is that as a business owner you can employ your spouse without the need to formally declare him/her as an employee. A sole proprietorship business can also be operated by married couples. However, the liability in such a case will be born by only one individual.
5. Personal Benefits
There are a lot of personal advantages that a sole proprietor receives. Besides having your decision-making power, you get to control the growth of your company and take it in the direction you want. You have the freedom to work to your will. With the success of your business, you get the opportunity to start other personal businesses as well.
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