Kickstart Your Corporation

Chapter 1Incorporation 101

If you're reading this and you're not incorporated, you need to call your financial planner right now and ask them why they haven't recommended that you incorporate. One of my best friends is a very successful family doctor in Ontario. We made sure that as of day 1 in his career—before he'd even received his first Ontario Health Insurance Plan (OHIP) payment—his medical professional corporation was set up and properly structured. Over the course of his career, this single move has saved him hundreds of thousands of tax dollars. So if you're a practicing professional, and you're not incorporated, why not?

What You'll Get Out of This Chapter

This chapter covers the basics of incorporating for the professional and business owner, including a review of the process and costs to incorporate, as well as the likely benefits. We also review when incorporation may not be beneficial, and how buying a house meshes with your corporate structure.

In this chapter, you'll learn about shareholder loans, the lifetime capital gains exemption, how a corporation can provide creditor protection, and what to do with your corporation when you transition into and through retirement.

Why Incorporate?

Here's the answer: the rationale for incorporation is the difference between paying income taxes at your personal rate, which can be as high as 53.53% (Ontario's highest marginal rate in 2020 after $220,000 of income), or your corporate small business deduction (SBD) ...