Incorporating your Canadian business creates a separate legal entity and may significantly reduce your tax burden. A Canadian-controlled private corporation (CCPC) pays the small business rate - 9% federally - on the first $500,000 of active business income, compared to your personal marginal rate which can exceed 50% in some provinces. The tax deferral advantage allows you to leave money in the corporation and invest it, paying personal tax only when you extract the funds. However, incorporation also means additional accounting and legal costs, and the benefit depends entirely on how much income you leave inside the company each year. This calculator compares your after-tax position as a sole proprietor versus as an incorporated business owner so you can make an informed decision.