Sole Proprietor vs Incorporation Calculator Ontario 2026 | Insight CPA

Free Canadian Tax Tool · Insight CPA

Sole Proprietor vs Incorporation Calculator Ontario 2026 | Insight CPA

Compare the total tax you would pay as a sole proprietor vs an incorporated CCPC in Ontario for 2026. Uses the current 12.2% Ontario combined small-business rate (federal 9% + ON 3.2%) and 2026 personal brackets with Ontario surtax and OHP. Assumes non-eligible dividends for personal draw.

Calculator

How to use this tool

  1. 1
    Enter your annual net business income. Revenue less all deductible business expenses, before any tax. Use last year’s actual or a realistic forecast.
  2. 2
    Enter the cash draw you need personally. The amount you need to withdraw for personal living costs (mortgage, groceries, etc.). Amounts you can leave in the business unlock the incorporation deferral advantage.
  3. 3
    Review both scenarios side-by-side. The tool shows total tax and after-tax retained wealth under each structure, plus a plain-English recommendation and next-step suggestions.

Frequently asked questions

What is the break-even income for incorporation?
In Ontario for 2026, incorporation typically starts to pay for itself around $80K-$100K of net business income when you can retain a meaningful portion inside the corporation. Below that, sole prop is usually simpler and cheaper once you factor in the roughly $2K-$4K/year of corporate compliance costs.
Does the calculator include TOSI?
No, it assumes a single owner-manager drawing dividends themselves. Income-splitting with a spouse or adult children is subject to the Tax on Split Income (TOSI) rules under s.120.4 ITA, which materially changes the analysis. Book a consult for a TOSI-aware comparison.
What about CPP contributions?
This v1 uses simplified brackets. As a sole prop you pay both employee and employer CPP (~$7K in 2026 at max). Corporations paying salary have that same combined cost but can also pay dividends, which are CPP-exempt. Real optimization requires salary/dividend mix planning.

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