Free tool · Structure

Should I incorporate? A rough tax comparison.

Enter your business income, what you need to take out and any other income. See rough 2026 tax as a sole proprietor next to corporate tax plus personal tax on the dividends you draw — and what stays deferred in the corporation.

Your numbers

Net business income for the year

Profit after expenses, before paying yourself or any tax.

What you need to take out personally

What you would pay yourself from the business this year to live on.

Other personal income

Employment, pension or investment income taxed either way. Enter 0 if none.

Uses 2026 federal and Ontario personal rates, the 12.2% combined small-business rate on the first $500,000, and non-eligible dividends for what you take out. Rates as at 2026-09-25.

Rough estimate, not advice

Tax this year with a corporation

$15,325 less

Mostly because profit left in the corporation is taxed at the small-business rate now and personally only when it comes out.

Sole proprietor — personal tax on the business income: $40,876
Corporation — corporate tax: $18,300
Corporation — personal tax on $80,000 of dividends: $7,250
Corporation — total this year: $25,550
Left in the corporation, taxed later when withdrawn: $51,700

CPP, the Ontario health premium, salary instead of dividends, incorporation and annual filing costs, and what happens to retained profit later all change this answer.

General information only. A rough estimate for an Ontario resident using 2026 federal and Ontario brackets, the basic personal amounts, the combined small-business rate and non-eligible dividend rules, worked out in your browser — nothing is sent or stored. It is not tax advice and not a recommendation to incorporate. CPP, the Ontario health premium, salary, costs, deferral and other factors change the answer. Rates as at 2026-09-25.

About three minutes

Thinking about incorporating?

Tell us about the business, what you take out and where it’s heading. A partner will walk through the tax, the costs and what else changes.

Start: incorporation

Prefer to talk? (905) 234-6925

The background

How the comparison works, and what it can’t tell you.

The estimator is a first look at one question — tax this year — with the rates published by the CRA and Ontario. Whether to incorporate is a bigger question than that.

Where the saving comes from

A corporation pays the small-business rate on active business income, currently about 12% combined in Ontario on the first $500,000. Personal rates climb well past that. Profit you leave in the corporation is taxed at the low rate now and personally only when you take it out.

Why it shrinks when you take it all out

Dividends are taxed personally with a gross-up and credit designed so that corporate tax plus personal tax lands close to what you would have paid as a sole proprietor. If you need every dollar to live on, there is little left to defer.

What the estimate leaves out

CPP contributions, the Ontario health premium, paying yourself a salary instead of dividends, incorporation and annual filing costs, the small-business limit grind for larger corporations, and income splitting rules. Any of these can change the answer.

Beyond tax

Incorporation also brings limited liability, a separate legal entity for contracts and lenders, and the lifetime capital gains exemption on a future sale of qualifying shares. Those matter more than a year’s tax difference for many owners.

Questions

Is this what I would actually pay?

No. It applies only the basic personal amounts and the dividend tax credit, ignores CPP and the Ontario health premium, and assumes everything you take out is a non-eligible dividend. Treat it as a direction, not a number.

What about salary instead of dividends?

Salary is deductible to the corporation, creates RRSP room and CPP contributions, and is taxed as ordinary income. Many owners use a mix. The estimator uses dividends only to keep the comparison simple.

What does the profit left in the corporation cost later?

It is taxed personally when it comes out, at that year’s rates. The benefit is deferral — and investment income earned on it inside the corporation has its own rules.

What does incorporating cost?

Incorporation fees, a minute book, a separate corporate tax return every year, possibly separate bookkeeping and a payroll account. Those ongoing costs are part of the answer.

Is anything I enter sent to Versa?

No. The comparison runs in your browser and nothing is stored. If you’d like to talk it through, start a conversation about incorporation.