Tax guides
Business structure under Canadian federal and provincial rules.
A holding company can own your operating company and receive some corporate dividends without ordinary income tax, but Part IV tax and anti-avoidance rules may apply. Investing inside either company can reduce the operating company's small business limit when the companies are associated. A rental corporation usually earns investment income, so compare the full tax and transfer costs before moving property.
Corporations
A Canadian sole proprietor or partnership can generally defer tax on eligible business assets by transferring them to a taxable Canadian corporation for shares and filing a section 85 election. The elected amount is set for each asset within legal limits. Receivables, GST/HST and land transfer tax need separate checks; incorporation alone does not defer tax.
Self-employed · Partnerships · Corporations
Choose who owns each client contract before invoicing. For separate businesses, each sole proprietor reports profit on their own T1 with T2125 and owes their taxes. In one shared partnership, each partner reports their share on a T1 and can owe its debts and GST/HST personally. A corporation pays tax on its profit and files a T2; owners report wages or dividends paid to them, and directors can owe unpaid remittances.
Self-employed · Partnerships · Corporations
Many licensed professionals can incorporate, but permission, share ownership and approval depend on the province and profession. A corporation does not erase personal professional liability. It may qualify for the small business deduction if it meets the usual tax rules, while billing a related clinic, joining a partnership or paying family dividends can change the result.
Self-employed · Corporations
There is no income level at which every Canadian business should incorporate. Incorporation may make sense when you consistently earn more than you need personally and can leave active business profit in the company. If you withdraw nearly everything or expect early losses, the added filings and costs may outweigh the tax deferral. Liability, clients, and province also matter.
Self-employed · Corporations
Yes. First check names, licences, articles, and owners. A proprietor can run both, personally pays tax, and combines taxable sales for one GST/HST $30,000 limit. One corporation can run both; for separate owners or obligations, form another. Each corporation pays and files separately, but associated Canadian-controlled private corporations share the federal $500,000 limit.
Self-employed · Corporations
Not sure which rules apply?