Should I Incorporate?

Launching a business name tag sticker

If you are thinking of incorporating, make sure it is for a good reason and that you understand your obligations as a corporation.

First, understand that your new incorporation is a legal entity unto its own.  You and the corporation are not the same.

You must run your corporation as a business, and you will incur all costs normally associated with running this business as in independent company.

Read the reasons to incorporate on the Canada Revenue Agency website.

Now that you have decided to incorporate, you have some obligations as a new business owner.

  1. Call Canada Revenue Agency to register your business.  1-800-959-5525
  2. Register for GST.  Once you make $30,000 of taxable sales, you must register for a GST number.  This number will be the same as your business number, but will have a suffix of “RT0001” at the end of it.
  3. If you have staff, register for payroll. This number will be the same as your business number, but will have a suffix of “RP0001” at the front of it.
  4. Decide how you will want to take your money from your company.  How you take your income will affect your obligations to CRA.
  5. If you are taking money monthly, and you have decided in #4 that it will be a regular monthly salary, then you must do monthly remittances to CRA.
  6. Get a bookkeeper.  The bookkeeper will ensure you always stay up to date and your obligations are being met.
  7. Put 20% of everything you make into a separate bank account.  This will ensure you always have money to pay the CRA.
  8. Decide how much money you will make as profit.  Then add 14% to that number.  You will send 14% of all your profits away to the federal and provincial governments.