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How incorporating can help protect your business

How incorporating can help protect your business

As a business owner, you probably realize the risks and pitfalls that come with the territory. Protecting your business from claims and lawsuits must be managed proactively, and there are multiple strategies business owners can use to try and bulletproof their investments.

Is your business at risk?
  • mortgage obligations
  • debts to third parties or vendors
  • claims for damages caused (by employees, product or professional liability)
  • consumer-protection issues
  • employment or labour claims
  • patent and copyright issues


These are just some examples of claims you could face, and all business owners should undertake a risk assessment for their individual business(es) to decide on the appropriate protection strategies.

Incorporating your business is one strategy you can use to protect your assets.

In Alberta, there are three different corporation types: Limited Corporations, Unlimited Liability Corporations and Professional Corporations. Here’s how each could help protect your business.

The most common type is the Limited Corporation. One of the main advantages of incorporating a Limited Corporation is the limited liability protection it affords a company’s shareholders. 

By incorporating, your liability will (with some exceptions) be limited to the amounts you have invested in the company.  This is in contrast to running your business personally, through a sole proprietorship, where all your personal property is up for grabs.

“A sole proprietor is personally responsible for all liabilities and obligations relating to the business.”

An Unlimited Liability Corporation is a special purpose entity which can offer certain tax advantages to a US shareholder when used properly in conjunction with sound tax advice.

Unlike Limited Corporations, the liability of each of the shareholders of an Unlimited Liability Corporation for any liability, act or default is unlimited in extent and joint and several in nature.

Given the complexities involved (and to the extent you have not already done so) we would strongly recommend that you seek advice from tax advisers to determine if an Unlimited Liability Corporation is right for you.

Professional Corporation is a type of corporation that provides professional services that are regulated by a governing professional body  (e.g. Chartered Professional Accountants, Chiropractors, Dentists, Lawyers, Physicians and Optometrists).

Professional Corporations do not shield shareholders from liability to the same extent that Limited Corporations do, but they do [_____________].

It is important to note that a Professional Corporation does not protect against liability for negligence or malpractice.

Incorporation is just one strategy to protect your personal and business assets, and we recommend seeking legal and tax advice to ensure you’re effectively mitigating the risks for your specific business.

Find out if incorporating is right for your business, email us at info@lawnch.ca for a free 30-minute consultation. ☁️

The content on this website is provided for general information purposes only and does not constitute legal advice or a legal opinion of any kind. Users of this website are advised to seek legal advice by contacting Lawnch (or other legal counsel) directly to discuss any specific legal issues.

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