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Sole Proprietorship  ·  Partnership  ·  Corporation

Choosing the Right Business Structure for Your Canadian Small Business

A practical guide for small business owners and farmers who want clarity, confidence, and fewer surprises.

Important note: This guide is for general information only and does not replace advice from a qualified accountant or tax professional.

Table of Contents

Introduction

Part 1: Sole Proprietorship

What Is a Sole Proprietorship?
Getting Started: Registration
What Works Well About This Structure
What to Watch Out For
How Sole Proprietors Are Taxed
CPP and GST/HST for Sole Proprietors
Is a Sole Proprietorship Right for You?

Part 2: Partnership

What Is a Partnership?
The Three Types of Partnerships
The Partnership Agreement — Don’t Skip This
What Works Well About a Partnership
What to Watch Out For
How Partnerships Are Taxed
Who Does a Partnership Work Best For?

Part 3: Incorporation

What Is a Corporation?
Federal vs. Provincial Incorporation
The Incorporation Process
The Real Advantages of Incorporating
What Incorporation Requires from You
Who Does Incorporation Work Best For?

Side-by-Side: Business Structure Comparison

Setup Cost
Personal Liability
Income Splitting
Raising Capital
Business Continuity
Capital Gains Exemption on Sale
Ongoing Compliance
Best for...

Making the Decision: Six Questions That Matter

Planning for the Future

A Typical Path We See
Provincial Considerations Across Canada

Working With Advisors

Reference Section

Introduction

"Should I incorporate, or just keep things simple?" It's one of the most common questions we hear from small business owners across Canada — and it's a great one to ask.

Here's the truth: there's no single right answer. The right structure depends on your income, your risk, your goals, and where you want to be in 10 years. But there is a wrong approach — and that's making this decision without understanding the full picture.

This guide walks you through all three main business structures available to Canadian entrepreneurs: sole proprietorship, partnership, and incorporation. We'll break down what each one means, how it affects your taxes and liability, and — most importantly — how it connects to your long-term financial future.

Because this isn't just a tax question. It's a long-term planning decision. And the right structure today sets the foundation for everything that comes next.

Part 1: Sole Proprietorship

What Is a Sole Proprietorship?

A sole proprietorship is the simplest way to operate a business in Canada. When a single person runs a business without creating a separate legal entity, that's a sole proprietorship. In the eyes of the law — and the CRA — you and your business are the same.

If you're earning self-employment income in Canada and haven't formally incorporated or set up a partnership, you're already operating as a sole proprietor. It's the default. And for many small business owners and tradespeople starting out, it's a perfectly reasonable place to begin. But "simple to start" doesn't mean "best long-term." Here's what you need to know.

Getting Started: Registration

If you use your own legal name: In most provinces, you don't need to formally register. That said, registration is still worth doing — it's often required to open a business bank account and gives you a paper trail.

If you operate under a business name: Any name that isn't your full legal name — for example, "Prairie Welding Services" — must be registered as a trade name with your provincial government.

Registration steps are straightforward: search your provincial business registry to confirm the name is available, submit the form, pay the fee (typically $60–$100 depending on the province), and you'll receive your registration certificate. Most provinces require renewal every 3–5 years.

What Works Well About This Structure

  • The simplest and least expensive way to get started — minimal paperwork, low fees
  • You're in complete control of every decision
  • Business income flows directly to your personal tax return (T1) — no separate corporate filing required
  • If the business loses money, those losses can offset other personal income, reducing your overall tax bill
  • Minimal administrative burden — no annual corporate filings, no minute book, no separate financial statements
  • Easy to wind down if you change direction

What to Watch Out For

The biggest risk of a sole proprietorship is also the simplest to explain: there is no separation between you and your business. That means your home, your savings, and your personal assets are on the line if the business is sued or can't pay its debts.

At higher income levels, you're also paying personal marginal tax rates, which can exceed 50% in some provinces. You can't split income with a spouse or family member the way you can with a corporation. Some clients — particularly corporate buyers and government contracts — prefer incorporated suppliers. And banks may limit how much credit they'll extend to an unincorporated business.

None of these are reasons to automatically avoid the structure. They're just the realities to weigh.

How Sole Proprietors Are Taxed

As a sole proprietor, all the money your business makes is treated as your personal income — there's no separation. You report it on your tax return (using a form called Schedule T2125), and it gets taxed at whatever rate applies to your total income for the year.

Federally, Canada uses a tiered system where higher income gets taxed at higher rates. For 2026, those tiers look like this:

  • Up to $58,523 → 14%
  • $58,523 to $117,045 → 20.5%
  • $117,045 to $181,440 → 26%
  • $181,440 to $258,482 → 29%
  • Over $258,482 → 33%

Your province adds its own tax on top of that. If you're in Ontario, Quebec, or BC and earning well, your combined rate can tip past 50% on the higher portions of your income.

CPP and GST/HST for Sole Proprietors

When you operate as a sole proprietor, you are considered self-employed. That changes how certain taxes work, particularly your Canada Pension Plan (CPP) contributions. When you are an employee, your employer pays half of your CPP contributions and you pay the other half. As a sole proprietor, you are responsible for both portions.

In practical terms, that means contributing 11.9% on your net business income up to $74,600. For earnings between $74,600 and $85,000, an additional enhanced contribution, often referred to as CPP2, applies at 8%. Because this enhancement was introduced fairly recently, many self-employed business owners are surprised by the extra contribution if they have not planned for it.

The good news is that business expenses reduce your net income before CPP is calculated. Legitimate deductions such as a home office, business use of your vehicle, equipment, software, and professional development can all reduce your taxable income. This is one reason why keeping good records and tracking expenses throughout the year really matters.

On the sales tax side, the rule is fairly simple. Once your business earns more than $30,000 in revenue over a rolling 12-month period, you are required to register for GST/HST and begin collecting it from customers.

Is a Sole Proprietorship Right for You?

This structure tends to work best when you're just getting started, your net income is below $80,000 annually, your liability risk is manageable, and you value simplicity over optimization. It's a great starting point — but most owners eventually reach a point where the numbers tell a different story.

Many of the business owners we work with started as sole proprietors and incorporated later, once their income justified it. There's no penalty for starting simple. The key is knowing when it's time to reassess — and having someone in your corner to help you recognize that moment.

You don't have to figure it all out on day one. But you do want a partner who can help you recognize when it's time to make a move.

Speak to a Business Tax Consultant

Part 2: Partnerships

What Is a Partnership?

A partnership exists when two or more people go into business together, sharing profits, losses, and responsibilities. Like a sole proprietorship, a partnership generally isn't a separate legal entity from its owners — you and your partners are the business.

Partnerships are common in professional services such as law firms, accounting practices, medical clinics, and engineering firms frequently operate this way. They can also be a natural structure when two tradespeople, farmers, or consultants decide to join forces.

The Three Types of Partnerships

General Partnership

The most common type. All partners share management responsibilities and — this is the part that matters most — all partners hold unlimited personal liability for the debts and actions of the business. That includes debts created by another partner acting on the business's behalf. If your partner signs a bad contract or makes a costly mistake, you're on the hook too.

Limited Partnership (LP)

A limited partnership has at least one general partner, who manages the business and holds full personal liability, and one or more limited partners, who invest capital but don't manage the business and whose liability is capped at their investment. LPs are common in real estate investments, farming structures, and investment vehicles.

Limited Liability Partnership (LLP)

An LLP gives partners protection from each other's negligence or misconduct while still allowing everyone to participate in management. In most provinces, LLPs are restricted to regulated professions — lawyers, accountants, architects, and similar. It's the structure behind most large professional service firms.

The Partnership Agreement — Don't Skip This

A formal written partnership agreement isn't always legally required, but it is absolutely essential in practice. More partnerships fail because of unclear expectations than because of poor business decisions. A solid agreement covers each partner's ownership percentage and initial capital contribution, how profits and losses are divided, decision-making authority, each partner's role and expected time commitment, what happens when a partner wants to leave or passes away, how disputes get resolved, and buy-sell provisions with a clear valuation method.

Without a clear agreement, disputes are governed by provincial partnership legislation, which may not reflect what you actually intended. This is one area where a good business lawyer is worth every dollar.

What Works Well About a Partnership

  • Combines the skills, capital, and experience of multiple people
  • Business losses flow through to partners' personal returns, which can offset other income
  • Shared workload and complementary expertise
  • Relatively simple to establish compared to incorporating
  • Flexible profit-sharing arrangements can be built into the partnership agreement

What to Watch Out For

Partnerships carry most of the same tax limitations as sole proprietorships — income still flows through at personal marginal rates. There's also an additional layer of risk that surprises many first-time partners: joint and several liability. Each partner can be held responsible for the full amount of the partnership's debts, not just their proportionate share. Any partner can legally commit the business to obligations without the other partners' consent, unless your agreement restricts this.

Partner disagreements can be costly and damaging. And the partnership may need to dissolve or restructure entirely if a partner exits unexpectedly. The warning we give most partnership clients is simple: plan for the hard conversations before they happen. A well-drafted agreement is far cheaper than a dispute.

How Partnerships Are Taxed

Partnerships are flow-through entities. The partnership files an information return (T5013) but doesn't pay tax itself. Each partner's share of income flows to their personal T1 return and is taxed at their own marginal rate — whether or not they actually withdrew that cash from the business. This means partners may owe tax on income they left sitting in the partnership account.

Active partners are also considered self-employed and pay CPP contributions on their share of partnership income. The same deductions available to sole proprietors apply to partnership income as well.

All About Tax Preparation for Small Businesses

Who Does a Partnership Work Best For?

Partnerships tend to be the right fit for two or more professionals combining complementary skills, regulated professionals in fields like law, accounting, medicine, or architecture (especially using the LLP structure), farming families or joint ventures pooling land and equipment, real estate investors using an LP structure, and business owners who need shared capital but aren't ready for incorporation complexity. The key ingredient in every successful partnership is trust — backed by a clear written agreement.

Part 3: Incorporation

What Is a Corporation?

A corporation is a separate legal entity from its owners. When you incorporate, you create something that can own property, sign contracts, hire employees, take on debt, and be held legally responsible — all in its own name, not yours. You become a shareholder. You may also be a director and officer. But the corporation stands on its own. That separation is the foundation of everything that makes incorporation valuable.

Federal vs. Provincial Incorporation

Federal incorporation (CBCA): Gives your corporation the right to operate under its name across every province and territory. Slightly more complex and expensive upfront, but worth considering if you plan to operate in multiple provinces, seek investment, or want stronger name protection nationally.

Provincial incorporation: Simpler and lower cost. The right choice for most businesses operating primarily in one province. If you later want to operate elsewhere, you register as an extra-provincial corporation — an added step, but manageable.

The Incorporation Process

Here's what incorporation generally involves:

  1. Choose a corporate name and conduct a NUANS search — confirms the name is available across Canada
  2. File Articles of Incorporation federally or provincially — defines your share structure, directors, and registered office
  3. Create and maintain a corporate minute book — contains your articles, bylaws, resolutions, and share register
  4. Issue shares and hold an organizational meeting, or pass initial resolutions in writing
  5. Obtain a Business Number (BN) from the CRA and set up corporate accounts for GST/HST, payroll, and corporate income tax
  6. Open a corporate bank account — kept completely separate from your personal finances
  7. Obtain any required provincial or municipal business licences

Cost estimates: DIY federal incorporation runs approximately $200–$250. Provincial incorporation ranges from $350–$500 depending on the province. Working with a lawyer typically costs $500–$2,500 or more depending on complexity. Ongoing accounting and legal fees for maintaining a corporation generally add $1,000–$5,000+ per year.

The Real Advantages of Incorporating

Limited Liability — Protecting What You've Built

When you incorporate, your personal assets are shielded from the corporation's debts and legal liabilities. A lawsuit against the business is a lawsuit against the corporation — not against you personally. Your home, savings, and family assets stay protected.

One important caveat: banks often require personal guarantees on loans from small corporations, which reduces this protection for debt obligations. But for third-party liability — a client who sues, an employee claim, a service dispute — the protection is real and significant. For higher-risk industries like construction, healthcare, or financial services, this alone can justify the cost of incorporating.

Lower Tax Rate — This Is the Number That Changes the Conversation

Canadian-Controlled Private Corporations (CCPCs) that qualify pay a dramatically lower tax rate on the first $500,000 of active business income, thanks to the Small Business Deduction. The federal small business rate is 9%. Combined with provincial rates, the total small business rate sits at approximately 9%–13% across Canada — compared to personal marginal rates that can exceed 50% in high-tax provinces.

The key isn't just the rate. It's what you do with the difference. Income left inside the corporation is taxed at 9–13%. Income drawn out personally is taxed at personal rates. But if you can leave a portion in the corporation — reinvesting in equipment, building reserves, growing the business — you're compounding from a much larger base. Over 10 to 20 years, that gap becomes very significant.

Taxes are only 4% of the big picture. But that 4% compounds.

Income Planning and Tax Flexibility

A corporation gives you options that sole proprietors simply don't have. You can pay dividends to adult family members who are shareholders, spreading income across lower tax brackets. You can choose when and how much income to draw, aligning your personal withdrawals with your actual lifestyle needs. You can pay a salary to family members who work in the business. You can balance salary versus dividends to optimize your RRSP contribution room each year.

These aren't loopholes. They're the planning tools a good tax strategy is built around. Your dedicated advisor helps you look ahead and avoid surprises — and this is exactly where that kind of planning pays off year after year.

Business Continuity

A corporation doesn't die when you do. Unlike a sole proprietorship or general partnership, which can legally dissolve when the owner passes away or exits, a corporation continues to exist. Shares transfer. The business carries on. This makes succession planning, ownership transitions, and eventual sale far more manageable — whether you're passing it to your children, bringing in a partner, or selling to a third party.

The Lifetime Capital Gains Exemption (LCGE)

This is one of the most powerful tax advantages available to Canadian small business owners. If you ever sell your qualifying small business corporation shares, you may be eligible to shelter over $1,016,602 (2024 figure, indexed annually) in capital gains completely tax free under the Lifetime Capital Gains Exemption.

For a business owner who has spent 10, 15, or 20 years building something, that exemption can translate into hundreds of thousands of dollars in tax savings at exit. But it only applies to qualifying CCPC shares — not to the sale of a sole proprietorship's assets, and not to most partnership interests. If you have any intention of selling your business someday, this is a conversation worth having now, not when a buyer appears.

What Incorporation Requires from You

The benefits of incorporation come with real responsibilities. On an ongoing basis, you'll need to file an annual return with your federal or provincial corporate registry to maintain good standing. You'll file a corporate income tax return (T2) within six months of your fiscal year end. You'll hold an annual general meeting, or pass resolutions in writing in place of one. You'll keep your corporate minute book current, recording major decisions, share changes, and officer appointments. And you'll update the registry if directors or officers change.

A neglected corporation can be dissolved by the government, wiping out the legal protections you put in place. But a good accountant and business advisor can manage most of this for you — and for many business owners, that ongoing relationship is one of the most valuable parts of working with a dedicated financial partner.

Who Does Incorporation Work Best For?

Incorporation tends to make the most sense for business owners earning $80,000 or more net annually, high-risk industries where liability protection matters, anyone planning an eventual sale (the LCGE alone can save hundreds of thousands in taxes), owners who can leave income in the corporation and reinvest for growth, businesses seeking investors or government contracts, family businesses where income splitting makes sense, and entrepreneurs building something they want to pass down or sell one day.

Ultimate Guide to Incorporated Small Business in Canada

Side-by-Side: Business Structure Comparison

Here's how the three structures compare across the factors that matter most:

Setup Cost

  •   Sole Proprietorship: Very low — $0 to $100
  •   Partnership: Low — $100 to $500
  •   Corporation: Moderate — $500 to $2,500 or more

Personal Liability

  • Sole Proprietorship: Unlimited personal liability
  • Partnership: Unlimited personal liability (joint and several in a general partnership)
  • Corporation: Limited to investment — personal assets protected

Income Splitting

  • Sole Proprietorship: Not available
  • Partnership: Limited
  • Corporation: Yes, dividends can be paid to shareholder family members

Raising Capital

  • Sole Proprietorship: Difficult
  • Partnership: Moderate
  • Corporation: Easiest (Corporations can issue shares to investors)

Business Continuity

  • Sole Proprietorship: Ends at death or exit
  • Partnership: May dissolve at partner exit
  • Corporation: Perpetual existence

Capital Gains Exemption on Sale

  • Sole Proprietorship: Not available
  • Partnership: Not available
  • Corporation: Up to $1M+ (LCGE, for qualifying CCPC shares)

Ongoing Compliance

  • Sole Proprietorship: Minimal
  • Partnership: Moderate
  • Corporation: High — annual filings, T2 return, minute book maintenance

Best for:

  • Sole Proprietorship: Solo operators, freelancers, and those starting out
  • Partnership: Professionals joining forces, regulated professions, joint ventures
  • Corporation: Growth-focused businesses, higher-income owners, those planning to sell

Making the Decision: Six Questions That Matter

The structure question isn't complicated once you know what to ask. Here are the six questions that guide most of our conversations with new and growing business owners.

What's My Real Liability Risk?

Think honestly about what could go wrong in your business. If a client or customer were harmed — physically, financially, or otherwise — and sued, what would be at stake? Tradespeople, contractors, consultants, and anyone working with the public face meaningful exposure. Healthcare providers and financial advisors face even more. If your personal home or family savings would be vulnerable in a worst-case scenario, limited liability is worth the cost of incorporation.

If you carry good professional liability insurance and your risk is modest — a freelance writer, a software developer with small clients — the calculus is different. But don't guess. Talk it through with an advisor.

How Much Am I Earning and How Much Do I Need to Take Out?

Income level is often the deciding factor between sole proprietor and corporation. A simple framework: under $50,000 net annually, sole proprietorship usually makes sense — the tax savings from incorporating rarely justify the added costs and complexity. Between $50,000 and $80,000 net, it's worth modelling with an accountant. Above $80,000 net, incorporation generally begins to make financial sense — especially if you don't need to draw all of it personally.

The critical question isn't just what you earn. It's what you need to live on. If you can leave $40,000 to $50,000 a year inside the corporation — paying 9–13% tax on it rather than 40–50% — that deferred tax becomes a powerful tool over time.

Am I Going Into Business With Others?

A sole proprietorship can only have one owner. If you're partnering with someone, your options are a partnership or incorporation. For most situations involving two or more owners, we lean toward incorporation — it's more flexible, provides better liability protection, and makes future changes to ownership much easier to manage. The exception is regulated professionals joining an existing firm, where an LLP is often the expected and most practical structure.

Do I Plan to Raise Outside Investment?

If you want equity investors — angels, formal stakes for family and friends, or venture capital — you must incorporate. Investors take shares in corporations. They can't own a piece of a sole proprietorship or general partnership. If growth capital is part of your plan, the structure decision is essentially made for you.

Do I Ever Plan to Sell?

Even if selling feels far off, it's worth building toward. The Lifetime Capital Gains Exemption — potentially $1 million or more in tax-free proceeds — only applies to qualifying small business corporation shares. That's not available to a sole proprietor selling their business assets. The time to structure for an eventual exit is now, not when a buyer appears. Getting the structure right from the beginning can mean hundreds of thousands of dollars of difference.

How Much Admin Can I Realistically Handle?

Be honest. A corporation requires ongoing filing, bookkeeping, annual returns, and a maintained minute book. If you're running a lean solo operation and the overhead would consume more value than it creates, starting as a sole proprietor is the sensible choice. There's no shame in starting simple. Many successful Canadian business owners spend their first few years as sole proprietors before incorporating when the numbers clearly justify it.

The road ahead is clearer with a partner beside you — and part of that partnership is knowing when the timing is right.

Planning for the Future

A Typical Path We See

There's no single right timeline for making these decisions, but here's the pattern we see most often among the business owners we work with:

In the early phase, most start as sole proprietors. It's low cost, maximum flexibility, and the right place to test whether the business has legs. As the business grows and net income approaches or exceeds $50,000, it's time to bring in a financial advisor and model what incorporation would actually save. At the established phase — typically $80,000 or more in net income — incorporation makes sense, and the real planning work begins: salary versus dividends, RRSP strategy, family involvement. And as the business matures, the focus shifts to succession, potential exit, and retirement planning. The structure you chose in Year 2 matters a great deal when the time comes to sell or pass things on.

There is no penalty for incorporating later. Many successful business owners make the move after two to five years when the numbers clearly justify it — and the transition is smooth with the right support.

Provincial Considerations Across Canada

Canada's business structure rules combine federal elements — especially tax, through the CRA — with provincial elements for registration, incorporation, and sales tax. A few things to know by region:

Ontario

Provincial incorporation under the Ontario Business Corporations Act is common for Ontario-focused businesses. Ontario corporations must file an Annual Return separately with the provincial government, in addition to the CRA T2. HST in Ontario is 13%, collected by most businesses once they cross the $30,000 threshold. Online incorporation is available through the Ontario Business Registry.

Alberta

Alberta has no provincial sales tax — businesses collect only the federal GST at 5%. The provincial corporate income tax rate is 8%, among the lowest in the country. Alberta is a popular incorporation jurisdiction for western Canadian businesses, particularly in energy, agriculture, and trades.

British Columbia

BC's Business Corporations Act offers strong flexibility and is popular with tech and service businesses. BC is one of the few provinces that does not require a NUANS search for provincial incorporation. The province has a PST separate from the federal GST, so businesses may need to register for both. BC's online incorporation system is among the most accessible in Canada.

Saskatchewan and Manitoba

Both provinces have relatively straightforward incorporation processes. Strong agricultural communities here mean specific farming tax rules interact meaningfully with business structure, particularly around AgriStability, AgriInvest, and equipment financing. Both provinces have PST separate from the federal GST.

Quebec (Not Serviced)

Quebec operates its own provincial tax administration through Revenu Québec — corporations file two separate annual tax returns. The Quebec Sales Tax sits at 9.975%, collected in addition to federal GST. Corporate names and key documentation must meet French-language requirements. Professionals in regulated fields should check with their regulatory orders regarding permissible structures.

The Bigger Picture: Taxes Are Only 4% of the Plan

A lot of business owners come to this decision thinking primarily about taxes. And taxes absolutely matter — choosing the right structure can save you thousands of dollars every year. But the structure decision connects to much more than your annual return.

It affects how you plan for retirement. It affects whether you can bring in a partner or investor down the road. It shapes how you'll eventually transition or exit the business. It determines how well-protected your family is if something goes wrong. The right structure isn't just about this year's bill. It's about building a foundation that holds up over the years ahead.

We help you look forward and not just back. Taxes are only 4% of the big picture.

Working With Advisors

Bring in a CPA before you make the final call if your net income is approaching $80,000, you want someone to actually model the numbers, or you have family members who might participate in the business. The cost of that conversation — typically $200 to $500 — is almost always worth it. A good advisor will tell you honestly if incorporation doesn't make sense yet.

You need a business lawyer when entering a multi-partner arrangement (a well-drafted partnership agreement is essential), when incorporating with multiple shareholders (a shareholders' agreement protects everyone), or when you're in a regulated profession with specific structural rules.

For many business owners, this is where having a financial partner makes all the difference — not just at tax time, but throughout the year, when the decisions actually happen. This is one of the first things we walk our Members through: not just the structure decision, but the full picture of where they are today and where they want to go.

Let's Talk About Business Tax Compliance

Key Terms, Plain and Simple

Articles of Incorporation: The founding document filed with government to create a corporation. Defines share structure, directors, and corporate name.

CBCA: Canada Business Corporations Act — the federal law governing federally incorporated companies.

CCPC: Canadian-Controlled Private Corporation. The specific corporation type that qualifies for the Small Business Deduction and the Lifetime Capital Gains Exemption.

Corporate Minute Book: The official record for a corporation — contains articles, bylaws, shareholder resolutions, and the share register. Required by law.

CPP Contributions: Self-employed individuals pay both employee and employer portions of CPP — effectively double the standard employee rate.

Flow-Through Taxation: A tax structure where the business doesn't pay tax — income flows directly to the owners' personal returns.

GST/HST: Goods and Services Tax / Harmonized Sales Tax — collected by businesses on behalf of the government once annual revenue exceeds $30,000.

Joint and Several Liability: In a general partnership, each partner can be held fully responsible for all partnership debts — not just their proportionate share.

LCGE: Lifetime Capital Gains Exemption — allows qualifying CCPC shareholders to shelter over $1 million in capital gains on a business sale, tax free.

Limited Partner: An investor in a limited partnership whose liability is limited to their investment. Does not participate in active management.

LLP: Limited Liability Partnership — available primarily to regulated professionals; protects partners from each other's negligence.

NUANS: The national name search required to confirm a corporate name isn't already taken before incorporation.

Personal Guarantee: An agreement by a director or shareholder to be personally responsible for a specific corporate debt, effectively waiving limited liability for that obligation.

SBD (Small Business Deduction): The CRA mechanism that reduces the federal corporate tax rate to 9% on the first $500,000 of active income for qualifying CCPCs.

Shareholders' Agreement: A contract between shareholders governing ownership rights, decision-making, and exit provisions. Essential for multi-owner corporations.

T2: The annual Corporate Income Tax Return filed by Canadian corporations with the CRA.

Trade Name / DBA: A business name registered by a sole proprietor or partnership that is different from the owner's legal name.

Unlimited Liability: Full personal responsibility for all business debts and legal obligations. Applies to sole proprietors and general partners.