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Canadian business owners typically incorporate for two main reasons: limited liability and tax advantages. As a shareholder, you have limited liability, meaning you are not personally responsible for the corporation's debts. This creates a separation between the individual and the corporation, which is recognized as a separate legal entity in Canada. Additionally, corporate tax rates are generally lower than individual tax rates, allowing for tax savings by choosing to pay yourself through salary or dividends. Incorporation can be done federally or provincially, granting the ability to operate across all provinces and sell internationally. Incorporating federally offers further business benefits.