Incorporate or Stay a Sole Proprietor in Alberta?

There's no universal answer — it depends on your income level, your liability exposure, and whether you plan to reinvest profits in the business or take them out personally. Here's what actually drives the decision.

As a sole proprietor, business income is taxed as personal income, reported on your T1. There's no separate corporate return, and no separate corporate tax rate — simpler, but every dollar the business earns is taxed at your personal rate, whether you need the cash personally or not.

Incorporating tends to make more sense when:

• The business consistently earns more than you need to live on, and the extra can stay in the corporation at the lower small-business tax rate.
• You want liability protection between your personal assets and the business.
• You're planning to bring in a partner, investor, or eventually sell the business.

Staying a sole proprietor tends to make more sense when:

• You're taking most or all of the business income out personally anyway.
• The costs of incorporation and separate filing aren't yet worth it for the business's size.

This is exactly the kind of decision Business Consulting is built for — we look at your actual numbers rather than giving a generic answer.