How incorporating helps you invest more
As a sole proprietor, every dollar you earn is taxed at your personal rates, which climb past 40% for most dentists. Inside a professional corporation, profit you leave in is taxed at the small business rate, about 9% to 12.5% depending on your province. The money you take out to live on is taxed about the same either way. So the difference is all in the money you don't spend.
Example: earn $200,000 and take out $100,000 in Ontario. As a sole proprietor, about $57,000 of the other $100,000 is left to invest. Inside a corporation, about $89,000 is. That's roughly $32,000 more invested in year one.
The catch
It's mainly a tax deferral. Money kept in the corporation is taxed again when you pay it out to yourself later. A corporation also costs money to set up and run each year, and its investment income is taxed at high rates. If you need almost everything you earn to live on, incorporating mostly adds cost.
Common questions
When should a dentist incorporate?
Usually once you earn meaningfully more than you need to live on and can leave that surplus invested for years. The calculator shows the year-one difference for your numbers.
Is the tax saving permanent?
No. It's mainly a deferral. Money left in the corporation is taxed again when it's paid out to you, ideally in lower-income years.
Can associates incorporate?
Often, if you work as an independent contractor rather than an employee. Rules differ by province and dental regulator.
Is this advice?
No. It's general information and an estimate based on 2026 rates. Individual situations vary. Run your own numbers past your CPA.
Important disclaimers
- General information only. This calculator and checklist are not financial, tax, legal, accounting or insurance advice, and not an offer or recommendation of any product. Individual situations vary.
- Results are estimates based on 2026 combined federal and provincial tax rates published at the time of writing. Rates are rounded, simplified and can change.
- Personal tax is estimated using marginal rates on the income you don't take out. It does not include personal tax credits beyond the basic rates, the Ontario Health Premium, other provincial surtaxes or premiums, CPP, EI or alternative minimum tax.
- The corporate figures assume all profit qualifies for the small business rate. The small business limit is $500,000 a year, shared by associated corporations, and can be reduced if a corporation has more than $50,000 of investment income or large taxable capital. Profit above the limit is taxed at a higher general rate.
- Money kept in a corporation is generally taxed again when it's paid out to you as salary or dividends. Incorporating mainly defers tax; over time, the total tax can be similar or, in some cases, higher.
- A corporation has setup costs and yearly costs, including its own tax return and financial statements, which are not included in this estimate.
- Investment income earned inside a corporation is taxed at high rates, and part of that tax is refundable only when taxable dividends are paid.
- Associates can usually incorporate only if they work as independent contractors rather than employees. The tax authorities look at the actual working relationship, not just the contract.
- Professional corporation rules, permits, fees and who may own shares differ by province and by regulator. Income paid to family members may be subject to the tax on split income (TOSI).
- How you are paid (salary or dividends) affects CPP, RRSP room, benefits and government programs. Insurance ownership and benefit taxation can change when you incorporate; insurance is subject to underwriting and policy terms.
- Quebec has its own rules, including an hours-worked test for the small business rate. Results for Quebec are less precise.
- Tax laws and rates change, sometimes retroactively. Run your own numbers past a qualified CPA and lawyer before incorporating.