Incorporate · By Industry
Usually yes, and often for liability more than tax. A job site carries real risk (injuries, property damage, defect claims), and a corporation keeps that exposure off your personal assets. On top of that, retained profit is taxed at Ontario's ~12.2% small-business rate. For most trades businesses past their first busy year, incorporating is worth it.
Usually yes, and often for liability more than tax. A job site carries real risk (injuries, property damage, defect claims), and a corporation keeps that exposure off your personal assets. On top of that, retained profit is taxed at Ontario's ~12.2% small-business rate. For most trades businesses past their first busy year, incorporating is worth it.
Construction is one of the few industries where the liability case for incorporating is as strong as the tax case. When you frame a house, wire a panel, dig a foundation, or run a crew, things can go wrong in expensive ways: a worker gets hurt, a client alleges defective work years later, water gets into a build, a passerby trips over materials. As a sole proprietor, you personally are the business, and a claim that exceeds your insurance can reach your house, your savings, and your truck.
A corporation is a separate legal person. Contracts, debts, and most claims land on the corporation, not on you individually. That separation isn't absolute. You can still be personally liable if you sign a personal guarantee, if you're personally negligent, or for certain unremitted taxes and unpaid wages. But for the everyday risk of running crews and job sites, the corporate shield is meaningful protection worth having.
This is why a lot of trades businesses incorporate even before the tax numbers alone would justify it. If a bad claim could wipe you out, the roughly $579 setup is cheap insurance for your personal assets.
In Ontario construction, WSIB coverage is mandatory for most operators, including many independent operators and executive officers in the construction sector, who are covered by default under the mandatory-coverage rules rather than being automatically exempt. Incorporating doesn't remove your WSIB obligations; you register the corporation as the employer and cover your workers, and often yourself. Budget for it and get your account set up early, because WSIB clearances are something general contractors will ask your sub-trades to produce.
Speaking of subs: be clear about who is a genuine subcontractor and who is really an employee. If you control how, when and where a worker does the job and supply the tools, the CRA and WSIB may treat them as your employee regardless of what the invoice says, which means source deductions, WSIB premiums, and potential back-assessments. A corporation makes the paperwork cleaner, but it doesn't change the underlying test. When you hire, decide the relationship honestly and document it.
Two cash-flow realities shape trades businesses. First, holdbacks: under Ontario's Construction Act, a statutory holdback (typically 10%) is retained on many projects and released after the lien period. That's normal, but it means a chunk of your billed revenue sits unpaid for weeks or months, so plan your cash flow around it, and understand your lien rights, which flow through your corporation once you incorporate.
Second, HST. Once your business passes $30,000 of taxable revenue over four consecutive quarters, you must register for HST/GST, charge it on your invoices, and remit it, while claiming input tax credits on the HST you pay for materials, fuel and tools. Most trades businesses cross $30,000 quickly, so many register right away. Your corporation gets its own HST account. Incorporating doesn't change the threshold, but it keeps the business's tax accounts cleanly separate from your personal ones.
Beyond liability, the tax argument is straightforward. Profit you leave in the corporation to buy equipment, cover a slow winter, or fund the next job's materials is taxed at roughly 12.2% in Ontario on the first $500,000 of active income, far below the personal rate that climbs toward 53.5%. For a busy contractor reinvesting in trucks, tools and working capital, that lighter tax leaves more cash inside the business to grow.
You pay yourself with a mix of salary and dividends, set with your accountant. Salary builds RRSP room and CPP and is deductible to the corporation; dividends are simpler but build neither. If your trades business is seasonal, the ability to retain profit in a strong year and draw it in a lean one is genuinely useful. Just don't over-engineer it early. Get incorporated, keep clean books, and tune the compensation mix once you know your numbers.
You answer a short questionnaire: numbered or named, your director and shareholder, an Ontario registered office, and your share structure. It takes about fifteen minutes, and we flag anything off before you pay.
We prepare your Articles of Incorporation, By-law No. 1, organizational resolutions and share registers, and file with the Ontario Business Registry, usually within one to two business hours. Your digital minute book arrives the same day, ready for the business bank account, WSIB registration, and HST account you'll set up next.
Three steps, no lawyer, no registry line-up.
Tell us about your business
Choose numbered or named, name your director and shareholder, and give an Ontario registered office. About fifteen minutes.
We prepare and file
CorpStart drafts your Articles, By-law No. 1 and resolutions, then files with the Ontario Business Registry, usually within 1 to 2 business hours.
Set up WSIB, HST and your bank
Your Certificate of Incorporation and digital minute book arrive by email the same day, so you can register for WSIB and HST and open a business account.
Sole proprietor vs. incorporated trades business
| Factor | Sole proprietor | Corporation |
|---|---|---|
| Personal-asset exposure to claims | Full (you are the business) | Limited to the corporation |
| Tax on retained profit | Personal rate (up to ~53.5%) | ~12.2% small-business rate |
| WSIB obligation | Yes (most construction) | Yes, corporation is the employer |
| HST once over $30k revenue | Required | Required (corporate HST account) |
| Best for reinvesting in equipment | Harder (taxed personally first) | Easier (profit taxed lightly first) |
| Setup cost | Low | ~$579 all-in via CorpStart |
Does incorporating protect me personally if someone is injured on my site?
It helps, but it's not a force field. A corporation shields you from most contract and third-party claims that fall on the business. But you can still be personally liable for your own negligence, for personal guarantees you sign, and for certain unpaid wages and unremitted taxes. Incorporation plus proper liability insurance and WSIB coverage is the right combination, not one alone.
Do I still need WSIB if I incorporate?
Yes. In Ontario construction, coverage is mandatory for most operators, including many independent operators and executive officers who are covered by default. Incorporating makes your corporation the employer; you register it with WSIB and cover your workers (and usually yourself). General contractors will ask your business for a WSIB clearance certificate.
My subcontractors invoice me: are they really subcontractors?
Only if the relationship is genuinely independent. If you control how, when and where they work and supply the tools, the CRA and WSIB may treat them as employees regardless of the invoice, which means source deductions and premiums. Incorporating cleans up the paperwork but doesn't change the test. Classify honestly and document the arrangement.
When do I have to register for HST?
Once your taxable revenue passes $30,000 over four consecutive quarters, HST/GST registration is mandatory. Most trades businesses cross that quickly, so many register from the start. You charge HST on invoices, remit it, and claim input tax credits on the HST you pay for materials, fuel and tools. Your corporation gets its own HST account.
Is incorporating worth it for a one-person trades business?
Often yes, because of liability. Even solo, one serious claim can reach your personal assets as a sole proprietor. Add the tax advantage on any profit you reinvest in tools and trucks, and incorporating usually pays off past your first busy year. If you're only doing occasional small jobs, a sole proprietorship may still be simpler for now.
Protect your personal assets.
$279 service fee + $300 Ontario government fee. Submitted to the Ontario Business Registry within 1 to 2 business hours, digital minute book the same day.
Start my corporationCorpStart is a document preparation service, not a law firm. The information on this page is general in nature and does not constitute legal or tax advice. For advice specific to your situation, consult a licensed lawyer or accountant.