Incorporation calculator: sole proprietor vs corporation

What this does and does not do

What it does. Applies the 2026 federal and Ontario rates to the same profit twice. Once as self-employment income, once as a CCPC paying corporate tax and then a non-eligible dividend on what you withdraw.

The part most people get wrong. If you withdraw every dollar, the two outcomes land close together. That is deliberate. The tax system is built to integrate, so that earning through a corporation and taking it all out costs about the same as earning it personally. The difference appears only on what you leave in the company, and that is a deferral. You pay the personal tax later, in the year you take the money out.

What it assumes. An Ontario CCPC with active business income under the $500,000 small business limit. A single owner with no other personal income. Non-eligible dividends, no GRIP. No passive investment income, so no grind to the small business limit. No EI, on the basis that an owner holding more than 40% of the voting shares is generally not insurable. Credits at the lowest federal and Ontario rates.

What it leaves out. The cost of incorporating and of filing a T2 every year, which is real and recurring. Limited liability, which is often the actual reason to incorporate and is not a tax question. Income splitting and TOSI. The Lifetime Capital Gains Exemption on a future sale. Provincial payroll taxes. Anything else already on your personal return.

What it will not tell you. Whether you should incorporate. That depends on liability, on whether the retained money has somewhere useful to go, and on how long you expect to leave it there.