Incorporation Of The Business; The Advantages limited liability – separates your personal assets from business and limits legal liability exposure to business assets only. Becomes even stronger factor if consider expanding the operations and hiring more staff. allows for flexibility in choice of compensation: timing of income – instead of getting your income when it’s received, being incorporated allows you to take your income at a time when you’ll pay less in tax dividends – may offer overall income tax savings vs. salary (on a side note by taking the compensation in dividends you are not accumulating RRSP contribution room) you may choose the compensation on a year-by-year basis (i.e. can switch between the 2 options) small business tax rates – with this flat rate of federal and provincial tax on active business income, a maximum of $500,000 of active business income qualifies for the 15.5% flat corporate tax rate – lower than personal tax rates in Ontario. continuance– unlike a sole proprietorship, a corporation has an unlimited life span; the corporation will continue to exist even if the ownership of the business changes- in case of the future buy out/partnership arrangement flexibility in share structure income splitting, family tax planning in the case of the sale of the business, a sale of shares allows for the possibility to take advantage of lifetime $750,000 capital gains exemption on Qualified Small Business Corporation shares While incorporation has the advantages listed it also requires additional compliance costs associates with accounting and tax return filings. This is just high-level overview and more detailed tax planning will be based on your individual goals and situation at the time.