Incorporation tax savings calculator
Updated
Quick answer: See roughly how much tax you could defer by leaving profit in a corporation instead of taking it all personally. Built for BC small businesses and contractors. A free tool from EverStone CPA, Abbotsford.
Already incorporated? Enter your company’s profit in our 2026 pay planner: it works out corporate tax, CPP and personal tax at every salary level for 2026 and shows the split that leaves you the most.
Opens your own email app with the numbers filled in — add your question and a CPA replies, usually the same business day.
Simplified estimate using an ~11% BC small-business corporate rate on retained profit vs your personal marginal rate. It shows tax deferral, not permanent savings — tax applies later when you withdraw the funds. Real outcomes depend on CPP, dividends, RRSP room and your full situation. Not tax advice — send an enquiry for your real numbers.
How much tax do I defer by leaving profit inside the corporation instead of taking it all out?
A sole proprietor deciding whether to incorporate, or an owner deciding how much to draw this year. It measures deferral, not saving. Tax on that money is paid later, when it comes out as salary or dividends.
On this page
A worked example from the calculator
These are the numbers already in the calculator above, so you can follow the arithmetic against the result it is showing.
| Step | Figure |
|---|---|
| Profit | $120,000 |
| Drawn personally | $70,000 |
| Left in the company | $50,000 |
| Rate difference | Personal marginal rate less the 11% small business rate |
| At a 40% personal rate | $50,000 × (40% − 11%) = $14,500 deferred this year |
What it assumes, and where it stops
Every estimate rests on assumptions. These are the ones that would change your number most.
| Assumption | What it means for your number |
|---|---|
| Deferral, not permanent saving | The gap closes when the money is paid out. The benefit is the use of the cash in the meantime, and any rate difference at the time of payout. |
| An 11% combined small business rate | That is the BC federal-plus-provincial small business rate. Other provinces differ. |
| It ignores the cost of the corporation | Incorporation adds a T2, financial statements, a separate bank account and annual filings. Below a certain profit those costs outweigh the deferral. |
| It ignores payroll cost on the draw | Taking the draw as salary triggers CPP on both sides, and possibly employer health tax. Taking it as dividends does not, but changes RRSP room. |
General information, not advice. Have a CPA confirm it for your situation
Should you incorporate? What the numbers really show
Incorporating lets you leave profit inside your company taxed at the low small-business rate (around 9–12% combined, versus personal rates that climb past 40%). That deferral is the main tax benefit — you only pay personal tax on what you actually take out, so you can smooth income across good and lean years.
But incorporation adds a T2 return, bookkeeping and filing costs, so below a certain income it isn’t worth it. The estimate above shows the potential deferral at a marginal rate you choose; the right answer depends on how much you need to live on, your province, and your plans. It’s a starting point for a conversation, not a decision on its own.
This calculator gives a general estimate for information only, not tax advice specific to your situation. Rates and rules change, and your result depends on details it can’t capture. We confirm the numbers for your circumstances once we review your enquiry.
Good to know
Does incorporating actually save me tax?+
At what income should I incorporate?+
What does incorporating cost?+
How should I read the savings estimate?+
What does this estimator not account for?+
What should I do before acting on the result?+
Run your own numbers first
No sign-up — quick calculators and straight answers from the CPA who does the work.
Sources
The rates and thresholds behind this page. Rates change — check the source before relying on a figure.
General information, not advice. Have a CPA confirm it for your situation
Related reading
Guides and tools that go deeper on what this page covers.
Want the exact numbers for your situation?
These tools are a starting point. Send an enquiry and we’ll run your real figures, and give you a fixed quote to handle it all.
If the numbers say yes, the next question is timing — when to incorporate covers the triggers and the sequence to follow.
Have a question about this?
Ask it free through the quick-question form and a CPA replies by email within one business day. For something that needs a proper look, a one-off Advice Call is a paid 45-minute session with a Chartered Professional Accountant: $225 plus GST, booked by email or phone with a secure payment link. It is credited against your first invoice if you become a client within 60 days. Looking for an accountant to take this on rather than an answer? Send an enquiry.
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