Do I need to incorporate? Sole proprietorship versus corporation in Ontario

"Should I incorporate?" is the first question most new owners ask us, and the most common wrong assumption is that the answer is always yes. It is not. Incorporation adds a layer of filings and cost. It earns its place when the business keeps profit, needs liability separation, or is dealing with clients and lenders who expect a corporation. Below is how we work through the decision, and what follows once it is made.

When a sole proprietorship is the better answer

If your profit is close to what you spend personally, a sole proprietorship may be cheaper to run. All of the income is yours, there is one tax return to think about, and the registration is light: an Ontario business name registration, Master Business Licence coordination and guidance on a CRA Business Number. Our Ontario sole proprietorship package starts from CAD 149 and includes a next-step accounting checklist so the books are organised from the first month.

A sole proprietorship still needs discipline. Self-employed tax, GST/HST once you pass the registration threshold, and clean records that support every deduction are all part of running one properly.

When incorporation makes sense

Three signals tell us a corporation is worth the extra structure:

• You retain profit. If the business earns more than you need to take out personally, a corporation gives you a planning conversation about salary versus dividends and the timing of income.
• You want liability separation. The corporation is a separate legal person from you.
• Clients or lenders expect it. Many contracts, financing packages and professional bodies work only with a corporation.

For realtors, physicians, dentists and other regulated professionals the equivalent question is whether a professional corporation or a PREC pays off yet. The logic is the same: it depends on how much income you leave in the business and your personal cash needs. We run the numbers before you pay legal fees.

Ontario or federal?

Once you decide to incorporate, the next choice is jurisdiction. Federal incorporation gives Canada-wide name protection but requires 25% Canadian-resident directors and extra provincial registration where you operate. An Ontario corporation is simpler and has no director residency requirement, which is also why many international founders choose it. We recommend based on where you will actually operate, not on which sounds bigger.

Named or numbered?

A numbered corporation is faster and cheaper. A named corporation requires a NUANS name search. If you are building a brand people will search for, register the name. If the corporation is a holding entity or you trade under a separate business name anyway, a number is fine.

How long it takes

An Ontario corporation is typically registered within one to two business days once we have your details. CRA accounts follow shortly after, and the full accounting setup typically completes within one to two weeks depending on responses and requirements.

The CRA accounts that follow

A Business Number is the base. From there you add program accounts only as the business needs them: GST/HST (RT) if you sell taxable goods or services, payroll (RP) if you hire, and import/export (RM) if you move goods across the border. GST/HST registration is generally required once taxable revenue exceeds CAD 30,000 over four consecutive quarters, but registering earlier lets you claim input tax credits, so we review whether it helps you from day one.

What incorporation does not do

Two things we say plainly to every founder. First, registering a Canadian company does not create residency, citizenship, immigration status, credit, loan or bank-account approval. Second, we handle registration filings and accounting, not legal advice. Shareholder agreements and legal opinions should come from your lawyer.

What it costs to do it properly

Our registration packages are priced as starting points, confirmed in writing before any work starts. Government fees are separate and shown before you pay.

• Ontario corporation basic, from CAD 599: named or numbered Ontario corporation, NUANS search for the named option, Articles of Incorporation filing and CRA Business Number setup.
• Ontario corporation complete, from CAD 899: everything in basic plus minute book and organising resolutions coordination, GST/HST registration and a payroll account where required. This is the package most owners choose.
• Business launch, from CAD 1,299: adds cloud accounting setup and chart of accounts, a compliance calendar and a 60-minute structure and tax orientation.
• Premium business launch, from CAD 1,999: for funded, multi-owner or multi-entity starts, with a shareholder structure consultation, import/export account setup where needed and the first 60 days of bookkeeping onboarding support.

Then the part that matters: the bookkeeping

Registration is step one. The reason to do it with an accounting firm rather than a filing service is what happens next: the accounting system, compliance calendar and monthly bookkeeping are set up so nothing is scrambled at year-end. Monthly plans start from CAD 299 per month for sole proprietors and new corporations, and every plan includes cloud accounting, a compliance calendar and a real person who knows your file.