In our opinion, you should incorporate your proprietorship once it has proven to be a viable business and once it has begun to generate cash in excess of your living requirements, so that you can take advantage of the tax deferral opportunity available in a corporation.
Once you have satisfied the above two criteria and incorporate, you will then also benefit from creditor protection and the potential income splitting opportunities with other family members (assuming you want to include other family members as shareholders). Potentially, you can also benefit from the capital gains exemption or multiplication of the capital gains exemption if you include other family members in the corporation. Currently, there is a lifetime capital gains exemption available to each adult resident for the amount of $750,000.
There is no “one solution fits all” in determining whether to incorporate a new or ongoing business; however, the answer should become clearer once you address the mentioned criteria.
If you are currently debating if you should incorporate, contact us today and we can help you determine if incorporating is the right fit for you. At Swift, we also offer incorporating services to make the process even easier.