Sole Proprietorship

Advantages
o Easy and inexpensive to register
o Regulatory burden is generally light
o You have direct control of decision making
o Minimal working capital required for start-up
o Some tax advantages if your business is not doing well (for example, deducting your losses from your personal income, and a lower tax bracket when profits are low)
o All profits go to you directly

Disadvantages
o Unlimited liability (if you have business debts, claims can be made against your personal assets to pay them off)
o Income is taxable at your personal rate and, if your business is profitable, this could put you in a higher tax bracket
o Lack of continuity for your business if you are unavailable
o Can be difficult to raise capital on your own

Incorporation

Advantages
o Limited liability
o Ownership is transferable
o Continuous existence
o Separate legal entity
o Easier to raise capital than it might be with other business structures
o Possible tax advantage as taxes may be lower for an incorporated business
o Income Control and Tax Deferral
o Income Splitting
o Perception
o Easier to get loans
o Brand Promotion

Disadvantages
o A corporation is closely regulated
o More expensive to set up a corporation than other business forms
o Extensive corporate records required, including documentation filed annually with the government
o Possible conflict between shareholders and directors
o You may be required to prove residency or citizenship of directors