Whether you should formally incorporate your gig work or remain self-employed depends on your annual income, business expenses, and tax savings potential. For most Canadian gig workers earning under $50,000 annually, staying self-employed is simpler and often more tax-efficient. However, if you're consistently earning $60,000 or more, incorporation may allow you to split income with family members, retain earnings in the business, and access small business tax rates that could save thousands in taxes each year. When you work as an independent contractor for platforms like Uber, DoorDash, Skip the Dishes, or Instacart, you're automatically self-employed by the CRA. This means you report all income and claim expenses on your personal tax return. Incorporating creates a separate legal entity (a corporation) that employs you and owns the business. Each structure has trade-offs: Self-Employed: - No incorporation or legal costs - Simpler tax filing with one T1 return - All business losses offset personal income immediately - CPP contributions are higher (both employee and employer portions) - Less flexibility for income splitting or retaining earnings Incorporated: - Corporate tax rates are lower than personal rates in most provinces (around 11-15% vs.
Most gig workers break even or start saving taxes with incorporation around $60,000-$70,000 in net annual income, depending on your province. Use the Incorporation Tax Calculator to model your specific situation and determine if the tax savings justify the extra accounting costs.
Not directly. With incorporation, you still pay CPP on salary, but only the employee portion on your own salary (the business deducts the employer portion). Self-employed workers pay both portions, making CPP costs higher. This is one advantage of incorporating if you earn substantial income.
Yes. If your spouse works in the business, you can pay them a reasonable salary or issue them dividends as a shareholder. This shifts income to their lower tax bracket, saving your household money, but the CRA requires documentation that the work was genuinely performed.
Usually not. If you earn less than $40,000 annually from gig work, the accounting and legal costs of incorporation (often $2,000-$3,000 yearly) exceed any tax savings. Stay self-employed and focus on claiming all eligible deductions.
Yes. Start as self-employed, track your income carefully, and incorporate once you hit the income threshold where tax savings justify the costs. There's no penalty for transitioning later, though you'll need to adjust your personal tax return and file a corporate return going forward.