To Incorporate or Not to Incorporate: That is the (Taxing) Question

Nov 7, 2025

If you’re a small business owner, you’ve probably asked yourself the million-dollar question—well, maybe more like the $15,000-a-year question:

Should I incorporate my business?

You started your company because you were great at something: baking, coaching, plumbing, consulting, or designing websites that don’t crash every Tuesday. But suddenly, as your business grows, you’re expected to also be your own accountant, lawyer, HR department, and IT support.

Congratulations—you’ve earned a PhD in Figuring Stuff Out the Hard Way.

That’s about the time you hear someone say, “You should really think about incorporating. You’ll save a fortune in taxes.”

Cue the panic.

So, I sat down with Shawn Gander, a CPA and CMA who runs a cloud-based accounting firm called Simplify Accounting. Shawn’s mission is to make accounting simple and business decisions smarter—and, thankfully for the rest of us, to translate accountant-speak into English.

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Act 1: The Solopreneur’s Wake-Up Call

When you’re a one-person show, life’s easy. You do the work, you get paid, you (hopefully) set something aside for taxes. You might even reward yourself with something fancy—like name-brand coffee.

But then business picks up. You take on subcontractors. You start signing contracts that have words like indemnify and whereas. And suddenly, you’re not just doing what you love—you’re managing risk.

That’s when incorporation stops being a mysterious corporate buzzword and starts sounding like a safety net.

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Act 2: Meet the “Corporate Veil” (and Why It’s Not a Fashion Statement)

“If something goes wrong with your business,” Shawn told me, “your customers or vendors can’t sue you personally unless they can pierce that corporate veil.”

Translation? Incorporating your business separates you from it. Think of it like a moat around your castle. The trolls (a.k.a. lawsuits) can attack the business, but your personal home, savings, and even that air fryer you love are better protected.

But remember: the moat only works if you maintain it. Keep your paperwork up to date, your accounting clean, and your insurance current—or the dragons will find a way in.

Watch my interview with Shawn here

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Act 3: The Tax Myth Everyone Believes

Let’s clear this up once and for all:

Incorporating won’t magically turn your tax bill into a Disney ending.

As Shawn put it, “You can deduct the same expenses as a self-employed individual that you can as a corporation.”

So that daily double latte? Still deductible. The yacht you claim is for “client entertainment”? Still not.

Where a corporation can help is in tax timing. If you make more money than you need right now, you can leave it in the company, pay the lower corporate tax rate, and take it out later when your personal tax rate might be lower.

It’s called a tax deferral, not a tax dodge.

But if you’re withdrawing every penny to pay bills, there’s no magic here—just more paperwork and higher accounting fees.

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Act 4: The Double-Taxation Myth (and Other Campfire Stories)

Here’s another myth that refuses to die: “You get taxed twice when you incorporate.”

Nope. It’s more of a tax tango than a double hit.

“It’s not double taxation,” Shawn explains. “If you pay yourself a salary, your company deducts that expense. If you pay yourself dividends, you don’t pay into CPP, but you get a dividend tax credit that offsets the corporate tax already paid.”

So yes, the government still gets its money. They’re just very creative about it.

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Act 5: When It Starts to Make Dollars (and Sense)

Let’s say your business earns over $100,000 a year. You’ve got consistent revenue, maybe even a few employees, and you don’t need to pull out all the profits.

Now incorporation starts to make sense.

In Alberta, for example, small businesses earning under $500,000 pay 11% in corporate tax. Compare that to personal tax rates that can climb as high as 48%, and you’ll see why business owners start grinning like kids in a candy store.

But Shawn reminds us: “Tax deferral isn’t tax savings—it’s flexibility.”

Flexibility to reinvest. To save for a rainy day. Or to keep your accountant from retiring early due to stress.

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Act 6: Building Something Bigger Than You

When I asked Shawn what makes incorporation really worthwhile, he smiled.

“If you set up your corporation with systems and processes—something that runs without you—you’ve built a tangible asset you can sell.”

That’s the real magic.

When you’re self-employed, your business ends when you do. But a corporation? It can live on. You can sell it, pass it on to your kids, or keep it running while you sip margaritas somewhere warm.

(Just make sure to issue your shares properly and maintain your company records. The CRA has very little patience for “I thought I did that.”)

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Act 7: The Cash Cushion

Here’s where incorporation really shines: when you’ve got more cash than you need personally.

As a sole proprietor, that full amount gets taxed in your personal bracket. Ouch.

But as a corporation, you can pay yourself a salary—say, $100,000—and leave the rest in the company, taxed at just 11%. That’s a huge difference in cash flow and planning.

Shawn adds:

“It’s not about hiding money. It’s about managing when you take it. That’s how you build flexibility and longevity.”

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Act 8: The Long Game

A corporation gives you options:

• Pay yourself through salary, dividends, or a mix.

• Bring in partners or investors.

• Set up trusts for estate planning.

• Pass the business on to your kids—or sell it entirely.

It’s not just a tax structure. It’s a strategy.

But like all strategies, it works best with a good team. An experienced CPA and lawyer can help you design the right setup for where you are—and where you’re going.

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Final Curtain Call

If you’re growing, hiring, or dreaming bigger, incorporation can be your ticket to scale, protection, and freedom.

If you’re just starting out or living off every dollar you make, keep things simple for now. There’s no rush to incorporate—only the need to be intentional when you do.

As Shawn summed it up perfectly:

“Your plan, your risk, and your cash-flow needs should drive the decision.”

So, whether you stay a proud solopreneur or start signing documents with “Inc.” after your name—make the choice with your eyes open and your advisors on speed dial.

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Free Tools and Resources

🎁 Get Shawn’s Free Incorporation Checklist:

👉 https://simplifyaccounting.ca/incorporating-in-canada-free-incorporation-checklist

📞 Book a 15-minute chat with Shawn:

👉 https://simplifyaccounting.ca

💬 Or connect with me for a 30-minute clarity call:

👉 MeetMe.so/MarcHaine| Marc@MarcHaine.com| MarcHaine.com

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Disclaimer

This article is for educational purposes only and doesn’t constitute legal or tax advice. Tax laws change faster than a TikTok trend—so always consult your accountant or lawyer before making financial decisions.

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