Incorporate federally or provincially, with the tax consequences explained first

The structure you choose on day one determines how you're taxed for years. It's worth twenty minutes of advice.

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Federal: Operate Canada-wide
Provincial: Lower cost
Federal CCPC rate: 9%
Ontario small business rate: 3.2%

Overview

Incorporation, done properly

Incorporating creates a separate legal person: it can own property, sign contracts and be sued in its own name, which is what puts distance between the business's liabilities and your personal assets.

The tax consequences are just as significant. Corporate income can be taxed far below personal rates, income can be split among family members who hold shares, and profit can be retained and deferred. But the structure has to be set up deliberately, because unwinding it later is expensive.

Worth knowing

Combined, that's about 12.2% on the first $500,000

An Ontario CCPC pays roughly 9% federally and 3.2% provincially on active business income within the small business limit. Compare that with the personal marginal rate on the same income and, at the right income level, the case for incorporating makes itself.

Who this is for

6 common cases

If one of these sounds like you, this service is a good fit.

Consultants and contractors whose income has outgrown sole proprietorship
Small business owners seeking liability protection
Partners formalising an arrangement between them
Trades and professional services with real liability exposure
Anyone planning to retain profit in the business rather than draw it all
Businesses expecting to operate in more than one province

What's included

What you actually get

Nothing appears on the invoice later that was not described here.

Federal or provincial filing
Articles of incorporation prepared and filed with the right registry for your situation.
Name search and protection
NUANS search and reservation, with advice on how much protection the name actually gets.
Share structure advice
Set up with future income splitting and possible investors in mind rather than the fastest default.
CRA registrations
Business number, corporate tax account, plus GST/HST and payroll accounts where needed.
First-year tax plan
Fiscal year end chosen deliberately, and a compensation plan agreed from the start.
Ongoing compliance calendar
So the annual return and T2 deadlines are diarised before you can miss them.

The process

How this works

4 steps, from first message to filed.

Step 01
Decide federal or provincial
A twenty-minute conversation about where you operate, what you're called, and where you expect to be in three years.
Step 02
Name search
NUANS report and clearance.
Step 03
Incorporate
Articles filed, share structure set up, minute book started.
Step 04
Register and plan
CRA accounts opened and your first-year tax approach agreed.

Step 01
Decide federal or provincial
A twenty-minute conversation about where you operate, what you're called, and where you expect to be in three years.
Step 02
Name search
NUANS report and clearance.
Step 03
Incorporate
Articles filed, share structure set up, minute book started.
Step 04
Register and plan
CRA accounts opened and your first-year tax approach agreed.

Questions

Incorporation questions

Straight answers to what people ask us most.

Federal or provincial - which should I choose?

Federal incorporation lets you operate anywhere in Canada, carries wider recognition and gives your name stronger protection across provinces. Provincial incorporation costs less, can access province-specific deductions and makes securing a business name easier. If you expect to operate in one province for the foreseeable future, provincial is usually the sensible choice.

At what income does incorporating make sense?

The turning point is usually when you can leave profit in the business rather than drawing everything out. If you need every dollar to live on, the corporate rate advantage largely disappears, and you have added filing costs. We run your actual numbers rather than quote a threshold.

What does incorporating commit me to?

A T2 return every year for as long as the corporation exists - including years it earns nothing - plus an annual return to the registry and separate books. Those obligations do not stop until the corporation is formally dissolved.

Can I add family members as shareholders?

Yes, and it is one of the main planning advantages, but the tax on split income rules constrain who can receive dividends and on what basis. It has to be structured properly from the start, which is exactly why we advise before filing rather than after.

Get started

Ready to sort out your incorporation?

Tell us your situation and we will come back with the exact scope, what we need from you, and the fee, before any work starts.

Key numbers

Federal: Operate Canada-wide; Wider recognition and stronger name protection across provinces
Provincial: Lower cost; Province-specific deductions and an easier time securing a business name
Federal CCPC rate: 9%; On active business income within the small business limit
Ontario small business rate: 3.2%; On the first $500,000 of active business income