Should I incorporate my small business in Canada?

Incorporate when your business earns more than you need to live on (generally $80,000+ in net profit) and you want to defer taxes by leaving money in the corporation. The small business tax rate (9% federal + provincial) is much lower than personal rates. Below that income level, the costs of maintaining a corporation may not be worth it.

What business expenses can I deduct in Canada?

Common deductions include home office expenses, vehicle costs (business use portion), supplies, professional fees, insurance, advertising, meals (50%), phone and internet (business portion), software/subscriptions, wages paid to employees, and CCA (depreciation) on equipment and vehicles.

Do I need to register for GST/HST?

You must register for GST/HST once your annual revenue exceeds $30,000 in any single calendar quarter or over four consecutive quarters. Voluntary registration before this threshold lets you claim input tax credits on business purchases.

Small Business Finance Guide Canada 2026 | Start, Fund, Manage & Tax Your Business

Running a small business in Canada means wearing many hats — including CFO. This guide covers every financial aspect: registering your business, choosing a structure, getting funding, managing taxes, insuring your business, and planning for retirement as a business owner.

Getting Started

Business Registration & Structure

Choosing the right business structure affects your taxes, liability, and paperwork.

Structure	Tax Rate	Liability	Complexity
Sole proprietorship	Personal rate (20%–53%)	Unlimited personal liability	Low
Partnership	Personal rate	Unlimited (general partners)	Medium
Corporation (CCPC)	9%–12.2% on first $500K	Limited to corporate assets	High

Should You Incorporate?

Funding Your Business

Funding Source	Best For
Small business loans	Established businesses with revenue
Government grants	Startups and specific sectors
Lines of credit	Cash flow management
Business credit cards	Daily operations and rewards

Business Taxes

GST/HST

You must register once revenue exceeds $30,000. Choosing the Quick Method can simplify filing.

Tax Deductions

Deduction	Notes
Home office	Proportionate share of rent/mortgage interest, utilities, insurance
Vehicle	Business-use percentage of gas, insurance, maintenance, CCA
Meals & entertainment	50% deductible
Professional fees	Accounting, legal, consulting
Insurance	Business insurance premiums
Advertising	Fully deductible
Supplies & equipment	Supplies expensed; equipment via CCA

Filing & Compliance

Salary vs. Dividends

The key tax planning question for incorporated business owners:

Method	Pros	Cons
Salary	Creates RRSP room, CPP contributions	Higher personal tax rate
Dividends	Lower combined tax rate, no CPP	No RRSP room, no CPP
Mix	Optimize for RRSP room + lower tax	More complex

Advanced Corporate Tax Planning

Accounting Software

Software	Best For	Starting Price
QuickBooks	Full small business accounting	$20/month
FreshBooks	Freelancers & service businesses	$11/month
Wave	Free basic accounting	Free

Business Insurance

Protect your business from liability, property damage, and business interruption.

Full guide: Business Insurance Guide Canada

Retirement Planning for Business Owners

Business owners don’t have employer pensions — you need to build your own retirement plan.

Strategy	Best For
RRSP (corporate salary)	Owners paying themselves a salary
Corporate investing	Leaving retained earnings in the corporation
Individual Pension Plan (IPP)	High-income incorporated owners 40+
TFSA (personal)	Tax-free growth outside corporation

Gig Workers & Freelancers

If you’re freelancing or doing gig work, much of the same tax rules apply: