Incorporating Means I Pay No Taxes

Money Myths & Tax Facts Series – Ford & Associates

“Once I incorporate, I don’t have to pay taxes anymore. Isn’t that the whole point?”

Ah yes—incorporation: the magic spell some folks think instantly turns tax into a faint memory and CRA into a fan club.

Incorporating does not eliminate taxes—it changes how and when you pay them.

Yes, corporations have access to lower tax rates (shoutout to the small business deduction), but unless you plan to leave your money trapped in your company like a forgotten houseplant… you will still pay taxes personally when you take it out.

Here’s the tax flow in plain English:

Your corporation earns income → it pays corporate tax

You want to use that income personally → you take it as a salary (taxed) or dividends (also taxed)

That’s right: double taxation—but strategically managed, it can still work in your favour

Incorporation is a tax deferral strategy, not a tax disappearing act.

⚠️ Other Things You Still Have to Do When Incorporated:

File a T2 corporate tax return every year

Keep separate books and records (no co-mingling your Starbucks runs)

Maintain a minute book and legal records

Pay yourself properly (no sneaking cash from the business account—CRA sees you 👀)

🧠 Incorporation Makes Sense When:

You’re earning more than you need to live on (so you can leave money in the corp)

You want to limit liability or separate personal from business risk

You’re scaling up, hiring staff, or looking for investors

You enjoy filing extra paperwork (just kidding—but really, it comes with responsibilities)

😂 Tax Chuckle of the Week:

Q: Why did the freelancer incorporate? A: To dodge taxes. Why did the CRA audit them? Same answer.

✅ Ford & Associates Pro Tip:

Thinking of incorporating? Don’t base it on myths from your cousin’s barbershop podcast. Talk to us first—we’ll run the numbers and tell you if it’s a smart move for your situation.

🧠 Ready to talk incorporation the right way? No fluff. No fairy dust. Just smart, strategic planning. Visit fordassociates.ca or book a consult with our team today.