Entrepreneurship & Small Business

Sole proprietorship vs corporation

  • Last Updated:
  • Jan 20th, 2019 9:47 pm
[OP]
Newbie
May 19, 2013
5 posts
Toronto

Sole proprietorship vs corporation

About 5+ years ago when starting a moving business I opened up a sole proprietorship as it was easier and less costly as many people say. However, just in 1 year I start realizing a few negative sides of being under sole proprietorship:
1. when requesting any credit products - everyone prefer corporation
2. Even if you lucky to get ones for your business - they will be on your credit file under your name
3. If you deal with wsib and etc - my personal name is always there even if I want to use my trade name
4. Anywhere you go and ask for something, my trade name (business name) never used. Just personal
5. Insurance, leasing for vehicles - only under personal
6. This became so annoying so I consider swithiching to corporation.

Here comes the trick. I need to change everything and possibly 5+ years of "business" credit development will be gone! It seems like it's less hassle to open a new corporation rather then try to change legal status.
Just for some people to consider longterm
5 replies
Deal Addict
User avatar
Aug 15, 2015
1568 posts
202 upvotes
Markham, ON
It is not wasted. Just make sure you keep your initial business name registration for your sole proprietorship. Do no cancel it until you have registered it with your new corporation.
[OP]
Newbie
May 19, 2013
5 posts
Toronto
This thread is created mostly for advice as I remember myself 5 years ago looking for how should I start my business on this forum. If I knew I would rather spend more money that day and every year after rather then constantly being told that "you are the business, I can not put your trade name on a piece of paper without your personal name". Many threads were created since then but without specific examples.
At that point, liability issue I decided to resolve with commercial/business insurance, but now I realize that this insurance won't likely work in case something happens (just from my life experience how insurance works). Better be separate from business by law.
Deal Expert
User avatar
Aug 2, 2010
15193 posts
4952 upvotes
Here 'n There
The aggro you are experiencing is self-inflicted and needless:

1. Anyone that prefers to give credit to a corp vs an individual is clueless as a corp has limited liability. An individual does not. Also, since you have the credit already it's water under the bridge.
2. So?
3. So?
4. You can have a trade name as a sole proprietorship.
5. So?
6. Not sure why.

A corporation is going to cost you money to operate just to get the financial statements, tax returns done, etc. Easily you'll pay $2-$3K more per year. Is your self-inflicted aggro is worth paying that? Only you know.

Now if you want to be incorporated so you have limited liability that's another story.
Newbie
Jul 19, 2010
33 posts
10 upvotes
Most lenders these days are going to ask for a personal guarantee on your corporate loan anyway.

Talk to an accountant about a section 85 to move the assets into a corporation in an efficient way if you go ahead with this.

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