How to Choose the Right Business Structure in Ontario: A Complete Guide for Entrepreneurs

By Bader A. Chowdry, CPA, CA, LPA | Insight Accounting CPA

Choosing the right business structure is one of the most important decisions for Ontario entrepreneurs. Your choice affects taxes, liability, and growth potential.

Sole Proprietorship

The simplest structure with minimal setup costs. Ideal for low-risk businesses. Income is reported on your personal tax return. Contact our Mississauga CPA team to discuss if this fits your needs.

Partnership

Two or more people share ownership. Requires a partnership agreement outlining responsibilities and profit sharing.

Corporation

Provides limited liability protection and potential tax advantages. The corporate tax rate of 12.2% on small business income can result in significant savings.

Making Your Decision

Consider liability exposure, tax implications, administrative requirements, and future growth plans. Our team of CPAs can help you evaluate your options.

Ready to incorporate? Call Insight Accounting CPA at (905) 270-1873 or get started online.

Frequently Asked Questions

What is the best business structure for tax purposes in Ontario?

For most businesses earning over $50,000 annually, incorporation offers the best tax advantages with the small business deduction reducing corporate tax to 12.2%.

How much does it cost to incorporate in Ontario?

Provincial incorporation costs approximately $300-$400 in government fees, plus legal and accounting professional fees for setup and organization.

Can I change my business structure later?

Yes, sole proprietorships can be incorporated later. However, transitioning from a corporation is more complex and may trigger tax consequences.