04 - Corporations in BC: What You Need to Know Before You Incorporate
If you're thinking about growing your business, protecting your personal assets, or looking more legit in the eyes of lenders and clients, incorporating might be the next step. But what does that actually mean? Let’s break it down.
What is a Corporation?
A corporation is a separate legal entity under the Business Corporations Act (British Columbia). Basically, incorporation is a legal structure to carry on business.
A corporation is legally distinct from you as the business owner. The corporation can:
Own property
Sign contracts
Take on debt
Sue or be sued
All under its own name.
In contrast with a sole proprietorship, you’re not the business, you own the business.
Who's Involved in a Corporation?
There are three key roles:
Shareholders – own shares in the company (owners)
Directors – responsible for governance and big-picture decisions
Officers – manage day-to-day operations (often the same person in small corporations)
Under the BC Business Corporations Act, every BC corporation must have at least one director.
If you're a solo entrepreneur, you might wear all three hats.
Why Incorporate?
Limited Liability
Your personal assets (like your house or car) are generally protected better from business debts and lawsuits.
Professional Credibility
A corporation can signal stability and professionalism, this matters when applying for funding or signing contracts.
Tax Planning Flexibility
While not governed by corporate law, incorporation opens up tax strategy options under federal and provincial income tax legislation, often in consultation with your accountant.
Continuity
Your corporation exists independently of its owners. That means your business continues even if you retire, sell, or bring on a new partner.
Mari’s Hot Takes:
1. Many of my clients wait too long to incorporate, because they’re unsure, overwhelmed, or don’t see their business as ‘big enough’ yet.
If you’re generating steady revenue or entering into serious contracts, incorporation isn’t something to save for “someday.”
2. If your business is making high five figures, approaching six figures, or already there, it’s likely time to incorporate.
Not just for protection, but for tax planning and long-term growth.
What Are the Trade-Offs?
Setup and maintenance costs (legal, accounting, annual filings)
More paperwork (e.g. corporate minute book, annual reports)
Less flexibility in some decision-making (corporate formalities apply)
Federal vs. Provincial Incorporation in BC
Most small businesses in BC incorporate provincially with BC Registries and Online Services, governed by the BC Business Corporations Act. Federal incorporation is an option under the Canada Business Corporations Act, but it’s usually better suited for companies operating across Canada or internationally.
Is Incorporation Right for You?
Incorporating can be a smart move if you:
Are earning enough revenue to justify the tax planning benefits
Want to protect your personal assets
Are planning to bring on investors or partners
Want to build a long-term, scalable business
For a refresher on how a corporation compares to other legal structures available to BC businesses, see our previous article.
Want to talk it through?
If you're unsure whether it's the right time to incorporate, or if you’re already incorporated and need help staying compliant, let’s talk. I work with women entrepreneurs and small business owners across BC to build legally sound, scalable businesses.
Book a free Legal Clarity Call
