Should you incorporate? Enter your business profit and how much you need to take out each year. The calculator compares tax and CPP as an Ontario sole proprietor with incorporating and paying yourself dividends, and shows how much stays in the corporation.
Fill in the form and press Calculate to see your estimate.
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Rates used: Federal small business rate (net): 9% (source); Ontario small business (lower) rate: 2.2% (source); Business limit (small business deduction): $500,000 (source); Non-eligible dividend gross-up: 15% (source); Federal dividend tax credit, non-eligible (% of taxable amount): 9.0301% (source); Ontario dividend tax credit, non-eligible (% of taxable amount): 2.9863% (2026) (source); CPP rate (employee and employer, each): 5.95% (source); YMPE: $74,600 (source); Federal brackets (up to, rate) (source); Ontario brackets (up to, rate) (source); Incorporation only (flat): $499 + government fees and HST/GST (source); Incorporation with full legal documents (flat): $999 + government fees and HST/GST (source).
Last updated: October 18, 2026
How the calculator works
Enter your profit: the business profit for the year, before paying yourself.
Enter what you need to live on: as a corporation, this is paid to you as dividends and the rest stays in the company.
Pick the tax year-end: it sets the corporate rate for that year.
Compare: the calculator shows the tax and CPP each way, side by side.
What changes when you incorporate
As a sole proprietor, all of your business profit is taxed on your personal return at your marginal rate, and you pay both halves of CPP on your self-employment earnings. A Canadian-controlled private corporation pays the small business rate on its first $500,000 of active business income. In Ontario that is 9% federal plus 2.2% provincial, 11.2% combined, from July 1, 2026 (3.2% Ontario before that). A tax year that spans July 1, 2026 is prorated by days.
Profit you leave in the corporation is taxed only at the corporate rate until you take it out. When you do, the dividend is taxed on your personal return, with a dividend tax credit for the tax the corporation already paid. Dividends carry no CPP, which saves money now but means no CPP pension built on that income.
T-Ledgers is a CPA-led accounting firm practising since 2020, led by Wajahat Ajmal, CPA, FCCA. We have worked with 202 clients, with a combined $60 million in client revenue.
Usually when profit is well above what you need to live on. Profit kept in the corporation is taxed at the small business rate, which defers personal tax until you take it out.
Mostly it is a deferral: money left in the corporation is taxed again as dividends when you take it out later. The benefit comes from investing the deferred tax and from planning.
11.2% combined (9% federal and 2.2% Ontario) on the first $500,000 of active business income of a Canadian-controlled private corporation, from July 1, 2026. Before July 1, 2026 the Ontario rate was 3.2%, and a tax year that spans that date is prorated.
