TORONTO, Ont. – There’s no shortage of advice on whether to incorporate your business or operate as a sole proprietor. Banks, business books, accounting firms – they all produce material that addresses the pros and cons. Most agree that the big advantage to incorporation is that it limits your personal liability should the business go sour. The main disadvantages, however, are the paperwork, cost and discipline involved. As you pour through business guides though, consider this.

Before you decide how to structure your business, look at three aspects of your financial life – tax planning, risk management and estate planning, advises Chris Bennett, general manager of TFS Group. (Based in Waterloo, Ont., TFS Group provides accounting and compliance services firm for transportation companies and owner/operators.) You should be asking yourself the following questions:

When it comes to tax planning:

Do you separate your business budget from your household budget? The more diligent you are about using separate bank accounts and credit to minimize overlap, the better you’ll be at maximizing tax benefits a corporation can provide.

Can you live on a modest budget, using income to build equity in your company? You’ll pay the lowest possible marginal rate of tax personally and pay a corporate tax rate that in most parts of Canada is below 20 per cent.

Is your family involved in your business? With the right share structure, your corporation can distribute income among family members to the best possible tax advantage, steering it away from those who are in a higher tax bracket to members who are taxed at a lower rate. Sole proprietors don’t have as much flexibility.

When it comes to risk management:

Worried about day-to-day risks on the road? Incorporation is another layer of protection that can help you avoid bankruptcy due to a catastrophe.

Are you borrowing money for the business and using personal credit to secure it? An incorporated company can build a divide between your personal credit and your business credit.

When it comes to estate planning:

Estate planning is a big part of incorporation. A corporation is a separate entity and can go on despite changes in ownership. You can avoid or defer extraordinary taxation at the time of death or retirement with proper estate planning.

And most importantly:

Can you ask for help? The natural follow-up is, of course, Are you being heard? Incorporation means new demands on your ability to plan ahead and keep records about what you’ve done in the past. Talk to your accountant and lawyer about your specific situation.