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Should you register as a Sole Proprietorship or Incorporate your business?

Let’s break it down so you can choose the structure that fits your vision, budget, and growth goals.

Author

sean h
April 04, 2025

⚖️ Sole Proprietorship vs. Corporation: A Quick Comparison

Feature

Sole Proprietorship 🧍‍♂️

Corporation 🏢

Ownership

One person

One or more shareholders

Legal Status

Not separate from owner

Separate legal entity

Liability

Full personal responsibility

Limited liability

Taxation

Personal tax rates

Lower corporate tax rates

Control

Total control

Shared with directors/shareholders

Startup Cost

Low (from $49 with Ownr)

Higher ($200–$350)

Funding

Harder to raise

Easier with shares/investors

Paperwork & Regulation

Minimal

More ongoing compliance

Exit Strategy

Limited planning

Better legacy/estate options

✅ Why Choose a Sole Proprietorship?

Perfect if you’re just getting started, want full control, and want to keep costs low.

Perks:

  • ⚡ Fast, easy, and affordable to set up

  • 💸 Lower upfront costs

  • 🎯 Full control—no board, no partners

  • 📉 Deduct business losses from personal income

Things to consider:

  • You’re personally liable for debts and legal matters

  • Raising funds may be more difficult

💼 Why Incorporate?

If you’re looking to scale, bring on partners, or attract investors, incorporation could be the way to go.

Top Advantages:

  • 🛡️ Limited liability—your personal assets are protected

  • 📉 Lower corporate tax rates

  • 💰 Easier access to funding and capital

  • 🕰️ Perpetual existence—even if ownership changes

  • 🧾 Streamlined estate planning

Heads-up: More paperwork, higher costs, and stricter compliance rules.

🧾 Do I Need Articles of Incorporation?

Only if you’re incorporating! These documents legally define your business structure.

You’ll need to include:

  • Business name and address

  • Names, addresses & citizenship of directors

  • Shareholder details and officer roles

💡 Pro Tip: Tools like Ownr make this process easy with step-by-step guidance.

💡 So, What Should You Choose?

Go Sole Proprietor if:

  • You’re testing the waters

  • You want something simple and affordable

  • You’re running the business solo (for now)

Incorporate if:

  • You’re planning to grow or scale fast

  • You’re taking on partners or shareholders

  • You want to protect your personal assets

🧠 Quick FAQ

Q: Can I switch from sole proprietorship to incorporation later?
A: Yes! Many entrepreneurs start as sole proprietors and incorporate when they grow.

Q: Do corporations really pay less tax?
A: Generally, yes—corporate tax rates are lower than personal income tax rates.

Q: Can a sole proprietor have shareholders?
A: Nope. You must incorporate to issue shares.

Ready to Take the Next Step?

Choosing between a sole proprietorship and incorporation is a big decision—but it doesn’t have to be overwhelming. Think about where you are now, where you want your business to go, and what kind of support you'll need along the way.

Whether you’re keeping things simple or planning for major growth, the right structure can set your business up for long-term success.

No matter what you choose, make it official—your future self will thank you.