Incorporated vs Sole Proprietor: What’s Best for Your Mississauga Business?
When you’re starting or growing a business in Mississauga, one of the biggest decisions you’ll make is how to structure it: Should you remain a sole proprietor, or is it time to incorporate?
This decision affects your taxes, liability, paperwork, and long-term potential—so it’s worth getting right. Let’s break it down.
Understanding Legal Structures
There are two common business structures for small business owners in Ontario:
Sole Proprietorship: The simplest form. You and your business are legally the same entity. Any income the business earns is reported on your personal tax return.
Incorporation: Your business becomes its own legal entity—a corporation. You’re now a shareholder or director, and the business files its own taxes.
Both options are perfectly legal, but each comes with its own set of pros and cons depending on your goals, income, and risk level.
Pros & Cons of Incorporation in Ontario
Incorporating is a big step—and it’s not just about having “Inc.” in your name.
Pros:
Limited Liability: You’re not personally responsible for business debts or legal issues.
Tax Deferral: Corporations often pay lower tax rates. You can leave income inside the company and draw a salary/dividends when it’s most tax-efficient.
Professional Image: Incorporated businesses may appear more credible to clients and investors.
Easier to Raise Capital: You can issue shares or attract investors more easily.
Cons:
More Paperwork: Annual filings, separate tax returns, corporate records, and compliance requirements.
Setup Costs: Incorporating in Ontario costs more than registering a sole proprietorship.
Ongoing Fees: Accounting and legal help may be needed regularly.
If you’re making steady profits or taking on significant risks, incorporation often makes sense. But for a brand-new freelancer or part-time hustle, starting as a sole proprietor may be more practical—at least for now.
Tax Differences: Sole Proprietor vs Corporation
Here’s where it really gets interesting: taxes. As a sole proprietor, your profits are taxed as personal income. This means the more your business makes, the higher your tax bracket—and potentially, the more you owe.
In contrast, a Canadian-controlled private corporation (CCPC) may qualify for the Small Business Deduction, which brings the corporate tax rate down significantly—often below 13% on the first $500,000 of active income in Ontario.
This can lead to big savings, if you’re making enough to justify the extra cost and complexity of incorporation. It also allows you to leave money in the company (rather than withdrawing everything), which can help with tax planning and investment.
Incorporating in Mississauga: Cost & Process
If you decide to incorporate, here’s what you need to know:
Cost: Incorporating federally or provincially in Ontario typically ranges from $300 to $500, depending on how you do it. If you use an accountant or lawyer to help, expect higher fees.
Process: You’ll need to:
Choose a business name and do a name search (or go numbered)
File incorporation articles (federal or Ontario)
Register for a CRA business number
Set up a corporate bank account
Start keeping corporate records and filing returns
At M7, we help Mississauga business owners handle this entire process—from registration to CRA setup to bookkeeping from day one.
When Should You Switch?
Here are a few signs it might be time to incorporate:
You’re earning $80,000+ annually from your business
You want to limit personal liability
You plan to hire employees or bring on partners
You want flexibility in tax planning
You’re ready to invest profits back into the business
If you’re not sure, start by chatting with an accountant. A 15-minute free consult can save you years of stress and unexpected tax bills.
Still Not Sure? We Can Help.
Choosing the right structure is a foundational decision—and it’s okay not to have all the answers. That’s what we’re here for. At M7, we help entrepreneurs and small business owners across Mississauga understand the best structure for their needs, now and in the future. Whether you’re just getting started or looking to scale, we’ve got your back.
Book a free strategy session today and let’s get your business set up for long-term success—with confidence, clarity, and no guesswork.
