Introduction
For many Canadian entrepreneurs, the decision to incorporate is one of the biggest milestones in their business journey. It separates “just getting by” from building a structure designed for growth, protection, and tax efficiency. But here’s something you may not know: a significant number of Canadian businesses choose to incorporate in the fall.
Why is that? Timing matters in tax planning and business strategy. Incorporating in September or October provides unique benefits that set you up for a smoother year-end and a stronger start to the next calendar year.
In this blog, we’ll explore why fall is the season when many business owners make the move, the tax and legal advantages of incorporating, and whether now is the right time for your business.
Why Incorporation Matters in Canada?
Before we dive into the timing, let’s take a step back and understand why incorporation is such a critical milestone for many Canadian entrepreneurs. Incorporating your business isn’t just about getting a new number from the CRA — it’s about transforming how your business is structured, taxed, and perceived.
Here are the core reasons why thousands of small business owners across Canada make the move every year:1. Limited Liability Protection
As a sole proprietor, your business and personal assets are legally the same. That means if your business takes on debt, gets sued, or runs into financial trouble, your personal home, car, and savings could all be at risk.
By incorporating, you create a separate legal entity. The corporation owns the assets, signs the contracts, and takes on the liabilities — not you personally. While directors can still be held responsible for certain obligations (like unpaid payroll remittances or HST/GST), incorporation generally shields you from personal liability.
Example: A contractor who incorporates is far less exposed if a project goes wrong and a client takes legal action. The corporation becomes the buffer between the business and their personal wealth.
2. Tax Advantages
One of the most compelling reasons to incorporate in Canada is the corporate tax rate. In Ontario, the small business tax rate is about 12.2%–15%, compared to personal tax rates that can climb over 40% once your income passes certain thresholds.
This means:
Money you leave inside the corporation is taxed at a much lower rate.
You can defer personal taxes by paying yourself later, when it’s more strategic.
The savings can be reinvested in equipment, hiring, or expansion rather than disappearing into higher personal tax brackets.
Example: A sole proprietor making $150,000 could easily pay 35–40% in personal taxes. Incorporating and leaving funds inside the company at 12–15% frees up tens of thousands for growth.
3. Income Splitting (Where Permitted)
Through the right share structure and planning, some incorporated businesses may be able to split income with a spouse or adult child. This can significantly reduce a family’s overall tax burden.
While CRA tightened the rules on income sprinkling in 2018, opportunities still exist for active family members working in the business. A proper share class setup, often created at incorporation, is critical if you want to keep this door open.
Example: If a spouse legitimately works in the company, paying them a salary or dividends could shift income from a high-tax bracket to a lower one — reducing the total household tax bill.
4. Credibility & Growth Opportunities
Clients, lenders, and suppliers often view incorporated businesses as more established and professional. This credibility can open doors that sole proprietorships may struggle with, such as:
Accessing larger contracts.
Securing financing from banks.
Negotiating with suppliers.
Many government contracts and larger corporate clients actually require contractors to be incorporated.
Example: A consultant may land bigger contracts with public companies or government agencies simply because incorporation signals stability and compliance.
5. Building for the Future
Incorporation also lays the foundation for:
Succession Planning → Easier to transfer or sell shares of a corporation than unwind a sole proprietorship.
Estate Planning → Allows for strategies like estate freezes and family trusts.
Long-Term Wealth Building → Corporations can hold investments, real estate, and insurance policies.
For business owners looking beyond the next tax season, incorporation becomes part of a bigger wealth strategy.
Incorporation isn’t just about saving tax today — it’s about protection, flexibility, and growth. But as important as why you incorporate is when you choose to do it.
Why Fall is the Most Popular Season to Incorporate?
Here are the main reasons Canadian businesses often make the move in September or October:
1. Tax Planning Before Year-End
Fall incorporation allows business owners to:
Plan whether to draw income as salary, dividends, or a mix before December 31.
Take advantage of remaining tax strategies for the year.
Avoid the stress of “too late to change” decisions in December.
By incorporating in the fall, you still have a full quarter to plan December in-corporations often miss out on these advantages.
2. A Clean Break for the New Year
If you incorporate in September or October, you get a few months to “test drive” your new structure. This means:
Setting up corporate bank accounts.
Switching bookkeeping systems to separate personal and business expenses.
Getting used to corporate record-keeping requirements.
3. Cash Flow Management in High-Expense Season
Fall is typically when businesses:
Pay year-end bonuses.
Catch up on vendor payments.
Make final investments before closing their books.
Being incorporated means you can decide whether to keep funds inside the corporation (at lower tax rates) or pay yourself out strategically.
4. Aligning With CRA Deadlines
The Canada Revenue Agency (CRA) has strict deadlines for:
Corporate tax installments
HST/GST filings
Payroll remittances
Incorporating in the fall allows you to align with these deadlines for the upcoming year, instead of rushing into compliance in January.
5. Business Growth & Seasonal Planning
Many industries — retail, hospitality, construction experience their busiest months in fall and winter. Incorporating ahead of this busy season helps you:
Protect personal assets during peak revenue months.
Secure financing for expansion or holiday inventory.
Present a stronger, more credible profile to clients and suppliers.
Common Misconceptions About Incorporating in Fall
When it comes to incorporation, timing raises a lot of questions. Many Canadian entrepreneurs hesitate to make the move in September or October because of misconceptions. Let’s clear them up.
“Shouldn’t I just wait until January?”
It’s a common belief that January is the “cleanest” time to incorporate after all, it’s the start of a new calendar year. But waiting can actually cost you:
Missed Tax Savings: By waiting until January, you may lose the chance to reduce your tax bill for the current year. For example, you could have shifted income into the corporation at lower tax rates or structured dividends before December 31. Those opportunities are gone once the year closes.
No Benefits at Year-End: If you’re still a sole proprietor in December, all your profits are taxed personally — often at higher rates — without the shelter of the corporate tax rate.
Less Flexibility: Incorporating in the fall gives you a quarter to test salary vs. dividend strategies and plan cash flow. Waiting until January forces you to make quick decisions at year-end without flexibility.
Takeaway: January isn’t automatically better. In fact, fall often gives you more room to maneuver while still setting you up for a clean start in the new year.
“Isn’t incorporating complicated this late in the year?”
Another misconception is that incorporating in September or October is too messy, especially if your books are already behind or you’re gearing up for year-end. But with the right help, it doesn’t have to be.
Here’s why:
Streamlined Setup: Incorporation can be completed in just a few days, including registering your business number, HST/GST account, and payroll accounts with the CRA.
Bookkeeping Transition: A CPA can help split your records between pre-incorporation (sole proprietor) and post-incorporation (corporation) periods. This ensures tax filings stay accurate.
Year-End Alignment: Even if you incorporate in the fall, your CPA can align your fiscal year-end strategically — for example, matching it with a slower season in your industry or optimizing for tax planning.
Takeaway: Incorporating late in the year doesn’t create chaos. With proper guidance, it’s often smoother than you think — and it positions you to hit the ground running in January.
“Will Incorporating Increase My Paperwork?”
Yes, corporations do have more compliance requirements, such as filing an annual corporate tax return (T2) and maintaining corporate records. But many entrepreneurs overestimate the burden. With modern bookkeeping software (like QuickBooks or Zoho Books) and CPA support, much of this process is automated.Takeaway: The additional compliance is minor compared to the tax savings, liability protection, and growth opportunities incorporation unlocks.
“Do I Need to Have Everything Perfect Before I Incorporate?”
No. You don’t need your bookkeeping flawless, your logo redesigned, or your website finished before incorporating. Many business owners hold themselves back because they want everything “set up” first. But incorporation can (and should) happen when the financial and tax benefits outweigh the wait.
Takeaway: Don’t delay incorporation because you’re waiting for the “perfect moment.” The right moment is often when your profits — and your tax bill — are rising.
Fall incorporation is not messy, rushed, or complicated. With professional guidance, it’s actually one of the smartest and most strategic times of the year to make the move.
Steps to Incorporating in Canada This Fall
If you’re considering incorporation, here’s a breakdown of the steps — with extra detail so you understand not only what to do, but why it matters.
1. Consult With a CPA
The first step is to talk with a CPA who specializes in small business incorporation. Why? Because incorporation is not a “one-size-fits-all” move. For some businesses, it’s a smart way to lower taxes, protect personal assets, and reinvest profits. For others, the costs of corporate filings, bookkeeping, and tax compliance may outweigh the benefits.
A CPA will review:
Your current and projected income.
Whether incorporation reduces your tax bill now or in the near future.
Liability exposure in your industry.
Your long-term goals (e.g., succession planning, expansion, or selling your business).
Takeaway: Don’t rush this step. A quick consultation can save you thousands in unnecessary costs or missed opportunities.
2. Choose Your Jurisdiction
In Canada, you can incorporate federally or provincially:
Federal Incorporation → Gives you the right to operate under your business name across all of Canada. This is ideal if you plan to do business in multiple provinces or want stronger brand protection.
Provincial Incorporation → Usually simpler and less expensive if you’ll mostly operate in one province (e.g., Ontario). Each province has its own rules and annual fees.
A CPA can help you weigh the pros and cons — for example, Ontario corporations pay certain filing fees, while federal corporations must also register provincially if they operate in that province.
Takeaway: The right choice depends on where your customers are and how far you plan to grow.
3. Set Up Your Structure This is where strategy comes into play. When you incorporate, you’ll need to define:
Directors → Those legally responsible for the company.
Shareholders → The owners of the company.
Share Classes → Common shares, preferred shares, or a mix, depending on whether you want income splitting, control, or flexibility.
Setting up the wrong structure now can cost you later. For example, issuing only one class of common shares may limit your ability to bring in investors, while skipping a family trust could complicate tax planning.
Takeaway: Get your share structure right at the beginning — fixing mistakes later can be costly.
4. Register for CRA Accounts
Once incorporated, your business will need new accounts with the Canada Revenue Agency (CRA):
Business Number (BN): This is your new corporate identifier.
HST/GST Account: Required if you make over $30,000 in taxable revenue annually.
Payroll Account: Needed if you’ll be paying yourself or employees a salary.
Import/Export Number (if applicable): If you trade internationally.
Takeaway: These registrations ensure you’re compliant and ready to handle taxes under your new corporate structure.
5. Update Banking & Bookkeeping
This is where many new corporations stumble. Once incorporated, your corporation is a separate legal entity. That means:
Open a new corporate bank account — never mix business and personal funds.
Set up accounting software like QuickBooks Online, Zoho Books, or Xero.
Keep all invoices, receipts, and corporate records organized.
6. Plan Owner Compensation Finally, the most strategic step: deciding how you’ll get paid. As the owner-manager of a Canadian corporation, you typically choose between:
Salary → Deductible for the corporation, builds RRSP contribution room, and contributes to CPP.
Dividends → Not deductible for the corporation but taxed at a lower rate personally, flexible for cash flow.
Mix of Both → Often the most tax-efficient option, balancing RRSP growth with lower personal tax.
Incorporating in the fall gives you time to test your compensation mix before year-end, rather than rushing in December.
Takeaway: Your pay strategy can save you thousands — this is where your CPA adds real value.
Incorporation is more than just paperwork it’s a strategic decision.
By making the move in the fall, you gain tax advantages, protect your personal assets during busy season, and set yourself up for a smoother new year.
Don’t wait until January when opportunities are lost. Now is the time to incorporate.
👉 Book your Incorporation Consultation today at Bhundhoo Tax Professional Corporation, we specialize in helping Canadian business owners navigate incorporation, tax planning, and long-term growth strategies. Whether you’re just starting out or scaling quickly, we’ll guide you through every step.