Topic hub · 46 pages
Choosing a business structure
Sole proprietorship, incorporation, shareholder pay and holding companies explained for Ontario owners, with guides, articles and a free incorporation tool.
A branching diagram of the structures an owner can choose between, from sole proprietorship to holding company.
Visual labels: Sole proprietorship; Corporation; Holding company.How a business is organized shapes who owes tax, who is liable for debts and how you can pay yourself. A sole proprietorship is simple and inexpensive to run, while a corporation adds separation, more paperwork and a different set of tax rules. Neither is better in every case.
The pages gathered here explain the choice from the tax and accounting side. Definitions describe the structures and the terms that come with them, including shareholder loans and dividends. Articles and guides discuss when incorporation tends to help, what changes after you incorporate and how to think about paying yourself as salary or dividends. The incorporation tool asks a few questions and points to the issues worth discussing, though it cannot decide for you. Legal advice on incorporating is separate from accounting advice, so speak with a lawyer about the legal side and an accountant about the tax effects before you change structure.
General information, not advice for your situation. How these pages are written and checked.
Guides (18)
Step-by-step checklists and plain-language walkthroughs.
Buying a business: a tax due diligence checklist
What to check before you buy a business: asset versus share purchase, price allocation, the GST/HST election, CRA account changes and the records to ask the seller for.
Read the guide Business essentialsCash flow crisis checklist for business owners
Short of cash right now? A step-by-step order for protecting tax money held in trust, talking to the CRA early, and rebuilding a short-term cash picture before choices get worse.
Read the guide Business essentialsCharity or non-profit: which structure fits your organization
Compare a registered charity with a non-profit organization on purpose, donation receipts, filings, spending rules and GST/HST, then work out which questions to settle before you choose.
Read the guide Business essentialsClosing a business: a tax checklist for owners
The tax steps for closing a sole proprietorship or winding up a corporation: final payroll, the GST/HST account, assets, dissolution, clearance and how long to keep records.
Read the guide Corporate taxCost to incorporate in Ontario: government fees and ongoing costs
The Ontario government fee to incorporate is $300, with no fee for the initial or annual return. Here are the ongoing costs, including Sora’s published prices, and how to weigh them.
Read the guide Business essentialsGST/HST return filing checklist
A step-by-step checklist for preparing a GST/HST return: confirm the period, reconcile sales, document input tax credits, complete the key lines, then file and pay by the deadline.
Read the guide Business essentialsHow to build an annual budget for your small business
A practical sequence for building a yearly budget: start from last year’s actuals, forecast revenue, fix your costs, add tax timing and review it monthly.
Read the guide Business essentialsHow to register a business name in Ontario: step-by-step checklist
Search the name, set up your Ontario Business Account, pay the fee, keep your company key safe and renew on time, with clear limits on what registration does not do.
Read the guide Business essentialsImporting goods into Canada: GST/HST checklist
A practical checklist for businesses that buy goods from outside Canada: who pays the tax at the border, how to claim it back, and how to self-assess the provincial part of the HST.
Read the guide Business essentialsIssuing official donation receipts: a checklist for charities
A step-by-step checklist for registered charities: confirm the gift and the true donor, work out the eligible amount, complete every required field, then correct, store and reconcile receipts.
Read the guide Business essentialsRideshare, delivery and platform income: tax guide
How rideshare and delivery drivers register for GST/HST, report platform income on Form T2125, claim vehicle costs and keep records that support the return.
Read the guide Business essentialsSole proprietor to corporation: a step-by-step tax checklist
The steps for moving a sole proprietorship into a new corporation: CRA accounts, moving assets with or without a section 85 election, the GST/HST election, payroll and the first T2.
Read the guide Business essentialsStarting a business in Ontario: a setup checklist
The order to set up a new Ontario business: structure and name, the provincial registration, CRA accounts, an HST decision, payroll if you hire, and records from the first day.
Read the guide Business essentialsStarting a partnership: a tax checklist for new partners
What to settle before you open a partnership: the agreement, CRA accounts, GST/HST, how each partner is taxed and whether a T5013 information return applies.
Read the guide Business essentialsWorking capital improvement checklist for small businesses
A step-by-step checklist for freeing up cash tied up in receivables, inventory and tax timing, without cutting what keeps the business running.
Read the guide Corporate taxSalary vs. dividends: how to pay yourself
How salary and dividends differ for an owner-manager, and the facts to gather before choosing a mix.
Read the guide Business essentialsShould I incorporate? Ontario guide, including an existing business
What changes when a sole proprietorship becomes a corporation, how to incorporate an existing business step by step, and the tax planning questions to settle before you file articles.
Read the guide Business essentialsBusiness year-end checklist: what your accountant needs
Organize the records and questions your accountant needs before a business year-end.
Read the guideTools (4)
Free calculators and checklists that run in your browser.
Should I incorporate? estimator
Rough 2026 tax as a sole proprietor vs a corporation.
Open the tool Personal taxOntario dividend tax calculator 2026
Gross-up, credits and tax on 2026 eligible and non-eligible dividends.
Open the tool StructureOntario corporate tax calculator 2026
Federal and Ontario tax for a CCPC, with the July 1, 2026 rate change.
Open the tool StructureBusiness name checker
A first-pass check on an Ontario business name, before a NUANS search.
Open the toolArticles (5)
Longer explanations of the decisions behind the numbers, newest first.
- Corporate tax
Avoiding shareholder loan income inclusion in Ontario
Owe your corporation money? Learn when a shareholder loan is added to your income, how the one-year repayment rule works, and how to repay without a trap.
Read the article - Corporate tax
Holding company pros and cons for Ontario business owners
Is a holding company worth it? Weigh the real benefits and costs of a holdco for an Ontario owner-manager, including dividends, Part IV tax, association and compliance.
Read the article - Corporate tax
Home office for incorporated business owners in Canada
Working from home through your own corporation? The self-employed home office claim does not apply. Compare the employee claim, reimbursement and rent routes and their limits.
Read the article - Corporate tax
How dividends are taxed in Ontario: gross-up and credits
How Canadian dividends are taxed for Ontario residents: eligible and other than eligible dividends, the gross-up, federal and Ontario credits, T5 slips and a worked example.
Read the article - Corporate tax
Incorporation is only the beginning of your business setup
After incorporation, accounting and tax work still need a plan. Review records, corporate year-end, owner transactions, payroll and GST/HST obligations.
Read the article
Encyclopedia terms (19)
Definitions with examples, in alphabetical order.
- Capital dividend account (CDA)
What the capital dividend account is, what goes into it, how a corporation pays a tax-free capital dividend with Form T2054, and the 60% tax on excess elections.
- Corporation
A corporation is a legal entity separate from its owners. See what that means for liability, tax, record-keeping and paying yourself, with an example for Ontario owners.
- Deemed dividend
Learn what a deemed dividend is, the four situations in section 84 that create one, how a share buyback can trigger it, and what to ask your accountant first.
- Eligible dividend
What makes a dividend eligible, how the 138% and 115% gross-up works, and why a corporation must designate and notify shareholders in writing.
- Equity financing
Equity financing raises money by selling an ownership stake in your business. Learn how it differs from borrowing, and what owners give up in return.
- Holding company
A holding company is a corporation that owns shares or investments in other companies. Learn how holdco and opco work, what dividends and passive income rules apply, and what to ask.
- Intercorporate dividends
What intercorporate dividends are, why a corporation can usually deduct dividends it receives, and when Part IV tax applies to a holding company or investor.
- Line of credit
A business line of credit lets you borrow up to an approved limit, repay, and borrow again. See how interest works and how it differs from a term loan.
- Long-term debt
Long-term debt is money a business owes that is due more than a year away. See how it appears on the balance sheet and how interest and principal are treated.
- Owner’s equity
Owner’s equity is what is left of a business’s assets after liabilities. See how it differs for a sole proprietor and for a corporation.
- Part IV tax
What Part IV tax is, when a private corporation pays 38 1/3% on dividends from other corporations, and how it is refunded through RDTOH.
- Partnership
A partnership is a business carried on by two or more people or corporations with a view to profit. See how income is taxed, who is liable and when a T5013 applies.
- Personal services business
Learn what a personal services business is, the five conditions the CRA applies, why the small business deduction is denied and which factors decide employee status.
- Refundable dividend tax on hand
Learn what refundable dividend tax on hand is, how eligible and non-eligible accounts build up, and how paying dividends can trigger a corporate refund.
- Share capital
Share capital is the money and value shareholders contribute in exchange for shares. Learn how it appears on the balance sheet and how it differs from retained earnings.
- Shareholder benefit
Learn what a shareholder benefit is, how the CRA treats personal costs paid by a corporation, and what records help show a payment was genuinely business.
- Shareholder loan account
Learn what a shareholder loan account records, why the direction of the balance matters, and why personal withdrawals from a corporation need careful review.
- Sole proprietorship
A sole proprietorship is an unincorporated business owned by one person. See how income is reported on T2125, what unlimited liability means and which CRA accounts apply.
- T2 Schedule 50 (shareholder information)
What T2 Schedule 50 is, which private corporations must file it, how the 10% shareholder rule and ten-shareholder limit work, and what records to bring to your accountant.
Who this affects (3)
Industries where this topic comes up often.
Tax advisory
Practical tax discussions for owner-managed businesses and individuals.
What it involvesTalk it through with an accountant
Reading helps you ask better questions. When the rules meet your own records, a conversation settles what applies. Sora’s tax advisory service is the closest match to this topic.
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