Sole Proprietor vs Incorporation

SOLE PROPRIETORSHIP	INCORPORATION
This business is owned by one person~YOU!	Separate Legal Entity owned by one more people
CHARACTERISTICS OF A SOLE PROPRIETORSHIP:	CHARACTERISTICS OF AN INCORPORATION:
This is an extension of you.  You make all the decisions	Decisions are made by the Board of Directors.
The expenses are all yours and could result in tax credits	Expenses are a Corporate Deduction
Any profits are yours to keep or reinvest in the business	Profits belong to the Corporation-you draw a salary or dividends.
You are taxed at the personal level.  No complicated                    corporate tax returns required	Taxation is multi faceted
You are personally responsible for all of the financial and legal          responsibilities of the business	Directors are not personally liable for the business' financial and legal liabilities**
The lifespan of the business is the same as the  owners	The Corporation has an unlimited life span-Transfer between individuals is achieved by selling shares
Set up costs are fairly minimal	Incorporation is more expensive, Minute Book organization required
Limited protection of the business name	Named Corporate Names are protected
Any capital raised must be guaranteed by Proprietor	Shares can be sold to investors to raise capital

 **Taxation and limited liability are probably the two greatest advantages to incorporating.  As a Sole Proprietor, your personal property will most likely be required as a guarantee for any money you borrow.  If the business fails, you may lose that property.  Your personal property is not as vulnerable if you are incorporated, provided you make sure to follow meticulous processes.  There are, however, some exceptions to this protection, including unpaid employee wages/vacation pay, employee deductions (CPP, etc) and HST that had already been collected by the corporation.

The invisible "line" between a business registration and incorporation is business sales of $30,000.  However, there may be another reasons for incorporating before this threshold is met and that is Image.  Depending on your clientele, the image you portray (professional, industry expert, successful, etc.) may be more easily achieved by incorporating.