
Choose the optimal structure for your practice
| Factor | Corporation ⭐ | Sole Proprietorship | Partnership |
|---|---|---|---|
| Tax Rate | 11-12.5% (CRA SBD) | 43-53% | 43-53% |
| Liability Protection | Yes (Limited) | None | None (shared) |
| Setup Cost | $2K-$4K | $200-$500 | $1K-$3K |
| Annual Costs | $3K-$6K (accounting, filing) | $500-$1K | $2K-$4K |
| Income Splitting | Yes (spouse, family) | No | Limited |
| Capital Gains Exemption | $1.25M lifetime | No | Available |
| Investment Income Tax | 50-55% (corporate rate) | 43-53% | 43-53% |
| Recommended For | Income over $150K | Very low income only | Multiple owners (rare) |
| Tax Savings (on $350K income) | ~$100K-$150K/year | Baseline (no savings) | Baseline (no savings) |
Tax rate: 11-12.5% on first $500K. Liability protection, income splitting, capital gains exemption on sale. Setup: $2K-$4K, annual: $3K-$6K.
For income $150K+
Tax rate: 43-53% on all income. No liability protection, limited tax planning. Setup: $200-$500, minimal ongoing costs.
Very low income only
Similar to sole proprietorship but shared. Requires partnership agreement. Each partner personally liable. Consider professional corporation partnership instead.
Rare in modern practices
Incorporate when earning $150K+ and retaining $30K+ after expenses. Below this threshold, incorporation costs exceed benefits.
Most practice owners incorporate immediately upon purchase given typical income levels of $250K-$350K+. Proper tax planning ensures you maximize the benefits.
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The right business structure provides tax efficiency, liability protection, and operational flexibility. We'll analyze your situation and recommend the best approach.
Let's determine whether incorporation makes sense for your practice.