Incorporation Benefits – Corporate and Small Business Tax Tips

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August 17, 2017
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September 10, 2017

Incorporation Benefits – Corporate and Small Business Tax Tips


Incorporation has a Tax Benefit & Limited Liability

The current combined personal tax rates are higher than corporate rates, so there is an inherent tax incentive for business owners to incorporate. Federally, the general corporate tax rate is 15%, while the small business tax rate for a Canadian-controlled private corporation (CCPC) is 10.5% on active business income not exceeding $500,000. This reduction is due to the small business deduction (SBD).


The concept of active business income is very important because business owners can claim the Small Business Deduction for the first $500,000 net income. Instead of having a job and getting paid $100,000, you can open up your own business. If you earn $100,000 in your business inside a corporation, you are only responsible for paying a 15% tax on $100,000. Hence instead of paying $24,979 personal tax, you now pay only $15,000 inside a corporation.


Besides the lower corporate tax rate, your business will also benefit from limited liability, hence saving personal assets in case of a lawsuit.


Hence in order to save taxes, you must

  • Incorporate your business


SA Accounting Solutions is a Professional Corporation registered with Chartered Professional Accountants of Toronto, Ontario. We are a full service public accounting practice dedicated to working with the Accounting and Tax issues of small to mid-size enterprises (SMEs). Our services include Assurance, Accounting & Compliances, Asset Protection and Trust Planning, Tax Planning, Bookkeeping & Payroll, SR&ED, Outsourcing Controllership and Internal Controls and Incorporation & Business Plans. Please call us at 416 824 6950 or email us at to book your one hour free consultation if you need help with incorporation.