Reviewed by Karim Eshqoor, Lawyer, Barbarian Law® (LSO #83032R)
A sole proprietorship is you — debts and lawsuits included. A corporation is a separate legal person, which is where limited liability, separate contracts and credit, and shares you can divide, transfer or sell come from. Incorporate when earnings, risk, partners, or a future sale make “just me” the wrong permanent structure.
Every business in Ontario starts with the same quiet decision, usually made by not making it: you start selling, and congratulations — you’re a sole proprietor. That’s fine on day one. The question is when it stops being fine, because the gap between “just me” and “my corporation” is wider than most owners realize — in liability, in contracts, and in what the business is eventually worth.
Barbarian Law® incorporates Ontario businesses for clients across Aurora, York Region, and the GTA: articles, minute books, shareholder agreements, and the estate documents that complete an owner’s structure. Corporate · Fees · Wills · Contact.
What is the difference between a sole proprietorship and a corporation?
A sole proprietorship is you. Not a metaphor — legally, the business is you. Its income is your income, its debts are your debts, its lawsuits are your lawsuits. Setup is nearly free (register a business name if you’re not using your own), and you report business income on your personal return.
A corporation is a separate legal person. It owns the business, signs the contracts, earns the income, and carries the debts. You own its shares and control it as director, but you and it are legally distinct. That separation is where almost every advantage comes from.
Does incorporating protect your personal assets?
As a sole proprietor, there’s no line between business and personal assets. A contract gone wrong, an injured customer, a supplier debt the business can’t pay — creditors can reach your home, your savings, everything. A corporation puts a wall there: with exceptions (personal guarantees, director liability for certain government remittances and wages, personal wrongdoing), business creditors are limited to business assets.
Two caveats. Banks and landlords routinely puncture the wall by demanding personal guarantees — which is why guarantee terms, and ILA on them, matter so much. And incorporation doesn’t replace insurance; it complements it.
What about tax?
That question belongs to your accountant, and we leave it there. Bring their recommendation to the call and we build the corporate structure around it: the share classes, who holds them, and the records that go with them.
What else does incorporation get you?
Beyond liability: contracts and credibility (many larger customers and lenders prefer or require dealing with a corporation), name protection in Ontario, continuity (the corporation survives you, and its shares can pass under a secondary will), and structure for partners and investors. You can’t give a partner 30% of a sole proprietorship, but shares divide cleanly — just sign a shareholder agreement while you’re at it.
What does incorporating cost?
Incorporation at Barbarian Law®
| Service | Price |
|---|---|
| Ontario incorporation, numbered company (incl. the $300 government filing fee, which carries no HST) | $1,000 + HST |
| Ontario incorporation, named company (incl. the $300 government filing fee, which carries no HST, and the NUANS search) | $1,250 + HST |
| Dye & Durham filing fee, every incorporation, no HST | $125 |
| Shareholder agreement, two shareholders | $1,500 + HST |
| Shareholder agreement, three or more shareholders | $2,000 + HST |
| Unanimous shareholder agreement, sole shareholder | $750 + HST |
| Minute books, amendments | $350/hour + HST |
Prices exclude HST and disbursements. Hourly work is billed against a written estimate you approve before work begins.
For the steps, the timeline and what goes into the minute book, see how to incorporate in Ontario.
The other side of the ledger: government incorporation fees are modest ($300 to file articles of incorporation in Ontario, plus a name search for a named company), but the real costs are ongoing. A separate annual corporate filing, accounting fees, a minute book that must actually be maintained, and more formality in how money moves between you and the company. Incorporation is a commitment to running the business like an entity, not a hobby.
A corporation does not cover your guarantees
Banks and landlords often ask owners to guarantee corporate debts personally. Whatever you guarantee, you still owe.
When is it time to incorporate?
Incorporate when any of these become true: the business earns more than you need to live on; you’re signing contracts or leases with real downside; you’re hiring; you’re taking on a partner or investor; a customer requires it; you’re in a field with liability exposure; or a sale is even a distant ambition. If you’re buying a franchise or applying for a liquor or cannabis licence, incorporate first — the structure should exist before the agreements name it.
Frequently asked questions
How much does it cost to incorporate in Ontario?
At Barbarian Law®, $1,000 plus HST for a numbered company and $1,250 plus HST for a named company, including the NUANS name search; both include the $300 government filing fee, which carries no HST, and a $125 Dye & Durham filing fee is added.
Should I incorporate provincially or federally?
A business operating only in Ontario usually incorporates provincially. A federal corporation gets name protection across Canada but must still register in each province where it carries on business.
Can I move my sole proprietorship into a corporation later?
Yes. The business assets are transferred to the new corporation. Your accountant should plan the transfer before we paper it.
The bottom line
Sole proprietorship is the right starting structure for a small, low-risk, early-stage business, and the wrong permanent one for a business that grows. The move to a corporation is cheap relative to what it protects and unlocks, and several of its biggest benefits reward doing it early rather than eventually.
Ready to incorporate — or not sure yet? Contact Barbarian Law to talk through your structure.
Where Art Meets Corporate Interest.
Get the structure right before it costs you.
Send what the business does and who the owners are. You get a written estimate before any work begins.
This article is general information about Ontario law, not legal advice, and reading it does not create a lawyer-client relationship. Every situation is different; speak with a lawyer about yours.
