When you start out on your own — whether as a freelance consultant, tradesperson or other professional — you’re automatically a sole proprietor. It’s the default setup for most self-employed folks.
But at some point, you might start wondering: Is it time to incorporate?
You don’t have to be a big company to register a corporation. Even a one-person business can incorporate. And for many small businesses, it can mean better protection and some solid tax advantages.
In this post, we’ll break it down:
- Should a sole proprietor incorporate?
- The advantages of being incorporated
- How to switch from a sole proprietorship to a corporation
VIDEO: Matt at True North Accounting talks about when a sole proprietor should incorporate.
Should a sole proprietor incorporate?
As a sole proprietor, your business and personal finances are one and the same. Your business income gets reported on your personal tax return. Simple, yes — but it can come with risk and higher taxes as your income grows.
When you incorporate, you’re creating a separate legal entity. That means:
✔️ The corporation earns its own income
✔️ It owns its assets
✔️ It takes on its own liabilities
✔️ And it pays its own taxes
The corporation runs the business. Then it pays you.
Here are some key questions to ask yourself:
- Do you need to borrow money or attract investors?
- Is there some financial or legal risk in what you do? (Talk to one of our recommended lawyers.)
- Is your business growing — or do you want it to grow?
- Are you making more than you need to live on right now?
If you answered yes to one or more of these, it might be time to consider incorporation.
The advantages of incorporating
Incorporating comes with a few perks that sole proprietorships just can’t offer:
1. Protect your personal assets
If something goes sideways — say you get sued or a loan goes unpaid — being incorporated limits how much of your personal life is on the line. That means your house, car and retirement savings are better protected.
To get this right, it’s best to talk to a lawyer and an accountant. (We can connect you with both.)
2. Save on taxes
Sole proprietors pay personal tax on all their business income. And if you’re doing well, that could bump you into a high tax bracket.
Corporations, on the other hand, pay just 11% tax on the first $500,000 of active business income in Alberta. You can pay yourself what you need for living expenses (through wages or dividends), and leave the rest in the company — for savings, investments, or big purchases like vehicles or equipment.
3. Open more financing doors
Corporations can build business credit and equity, which makes it easier to get loans, attract investors or qualify for government grants. If you’re planning to grow, incorporation gives you more flexibility.
Incorporation might be the right next step if:
- You’re earning more than you need and want to build up savings
- You’ll be hiring staff or raising money
- Your work comes with financial or legal risks
How to incorporate your business in Alberta
When you're ready to take that next step and incorporate, you've got two main options: hire a lawyer or do it yourself.
Option 1: Incorporate through a lawyer
We always recommend working with a lawyer to get your corporation set up right from the start. They’ll create your minute books, issue your share certificates and make sure your corporate structure is legally sound.
Your accountant will advise on the tax implications of the share structure, but it’s the lawyer who ensures your setup fits your business goals.
A lawyer will typically charge between $900–$1,200.
Option 2: Incorporate yourself — online or in person
If you’re comfortable doing it yourself, you can incorporate:
- At Alberta Registries in person
- Online using services like Ownr.co, starting around $500–$600. (Use our link for a discount code to bring your final cost as low as $278.)
If you incorporate yourself, you’ll also need to create your own minute books and issue share certificates. Need help incorporating? Reach out to us.
Important: You can incorporate federally through the Government of Canada’s Online Filing Centre, but we don’t recommend it. You’ll still need to register your business provincially, which adds about $500 more in fees.
DIY steps to incorporate in Alberta
- Choose a name
Do a NUANS search to make sure your business name is available. (Costs about $30.) Or skip it and go with a numbered company to save time and money. - File articles of incorporation
Decide who the shareholders are, their ownership percentages, share classes and values. - Establish your registered office and directors
This is the address where your minute books will be kept. Directors can sign documents and handle banking, but don’t need to be shareholders. - Pay the registration fee
Incorporation can be done in a day, and online registration fees start around $200.
We’ve broken it all down for you in this step-by-step guide:
👉 How to incorporate your small business in Canada
Start here if you’re ready to make the switch: Incorporate a business in Alberta
Whether you’re still weighing the pros and cons or ready to make the leap, we’re here for you.
📩 Reach out to us — we’ll help you figure out what makes the most sense for your business and your future.
✅ Download our free ebook: The Path to Starting Your Own Business
✅ Check out more helpful reads in our Starting a Business blog series
