Before You Incorporate: The Truth About Costs That No One Tells You
A complete breakdown of setup fees, yearly tax filing costs, payroll expenses, and hidden charges most new Canadian business owners never see coming.
For many Canadian small business owners, freelancers, independent consultants — and especially professionals like health-care workers, consultants, or individuals offering specialized services — incorporating can offer legal protection, tax-planning advantages, and a more “professional” business structure. However, incorporation brings costs: not just the one-time cost to set up the corporation, but ongoing costs for compliance, bookkeeping, tax filings, and payroll (if you have employees).
Because these costs vary widely depending on jurisdiction, complexity of operations, and services used, it’s critical to budget carefully before deciding to incorporate. This article will walk you through how to estimate these cost/s:
What your corporation setup fees might be;
What your annual corporate tax-filing fees could look like;
Which factors influence those corporate tax-filing fees and its costs; and
What your payroll fees could be if you run payroll through a service provider or an accountant.
Though your specific situation will vary (e.g. province, size of business, number of employees), this guide should help you build a ballpark estimate.
1. Estimating Corporation Setup Fees (One-Time)
When you first incorporate a business in Canada, the “setup fee” will generally include:
Government/registry filing fees (for articles of incorporation, name reservation/search, etc.)
Potential extra-provincial registration (if federal + you plan to operate in a certain province)
Professional service fees (if you use a lawyer, incorporation service, or accountant to do the paperwork, minute book, share structure, etc.)
Here’s how to break down and estimate those costs.
Government/Registry Filing Fees — by Jurisdiction
The base cost to incorporate depends on whether you choose federal incorporation (through the federal registry), or provincial incorporation (through your province’s registry).
For instance:
* These are the registry/government fees alone.
For example, in some provinces:
Ontario: ~ CAD 200 for incorporation + additional fee for name registration/NUANS — totaling around ~ CAD 360.
Quebec: government incorporation fee around CAD 389 (or similar depending on the registry) for provincial incorporation + additional fee for name registrations/NUANS - totaling around ~ CAD 464
If you incorporate federally, and plan to carry on business in a province (e.g. Quebec, Ontario, etc.), you may need to register extra-provincially in that province, which adds another fee on top of the federal incorporation fee.
For example — extra-provincial registration fees (if applicable) for Quebec (if the registered office is in Quebec) add on top of the base federal fee.
So rule of thumb: purely government/registry costs to incorporate anywhere in Canada generally range between CAD 200 and 500 (or a bit more if extra-provincial registration is needed). In many provinces, expect around CAD 300–400.
Additional Professional or Service Provider Fees
Just paying government/registry fees may be sufficient if you do everything yourself: prepare Articles of Incorporation, choose a share structure, maintain a minute book, set up corporate records, etc. However, many business owners prefer to hire a service provider (lawyer, accountant, firm or a professional) to handle the setup — especially to ensure compliance, proper corporate structure, share allocation, and future-proofing (e.g. readiness for adding shareholders, implementing share classes, etc.).
According to sources that survey costs across Canada:
Basic DIY (Do It Yourself) incorporation: only government fees (~ CAD 200–500)
Using a “full-service” incorporation service provider (preparation of documents, minute book, often one year of company record maintenance): some services quote CAD 599–699 as total package — including registry filing, name search, and access to platform/documentation which includes a corporation assistance fees from CAD 150-250 depending upon the quantity of work involved.
If you use a lawyer or accountant to set up share structure, bylaws, minute book, shareholder agreement, etc., expect additional fees — often hundreds to low thousands of CAD, depending on complexity.
Also, after incorporation there are ongoing compliance obligations: annual filings (e.g. annual return of corporation, usually $50 per year if done via a service provider and otherwise $12 as DIY), updating corporate records, possibly maintenance of registered office address, etc.
Realistic One-Time Corporation Setup Cost – What to Budget
Putting all of this together, here is a rough budget range for setting up a corporation in Canada (depending on how hands-on or full-service you go):
DIY, minimal-cost setup: ~ CAD 200–500 (government/registry fees only)
Basic “helped” setup (e.g. using an online incorporation service): ~ CAD 600–800 total — including registry filing, name search, document generation, minute book template, first-year records, etc.
Full-service/professional setup (lawyer or accountant helps with structure, shares, minute book, bylaws, perhaps shareholder agreement): CAD 800–2,000+ depending on complexity (number of shareholders, share classes, need for custom legal documents, etc.)
So, if you use a service provider (as presumably you will, especially if you wish to rely on a clean, compliant incorporation), it is reasonable to expect a one-time cost in the ballpark of CAD 700–2,000, though simpler cases can cost less.
2. Estimating Corporate Tax-Filing Fees (Annual / Year-End)
Once your corporation is up and running, you will — at minimum — need to file a corporate tax return each year (e.g. T2 return), and perhaps produce financial statements depending on your bookkeeping and reporting needs.
Your corporate tax-filing fees depend heavily on how “complex” your corporation’s finances are, how many shareholders there are, whether there are payrolls, GST/HST, multiple revenue streams, investments, etc.
Here’s how to think about estimating those fees.
What the “Tax Filing” Service Typically Includes
When an accountant or tax professional charges for corporate tax filing, they typically provide one or more of the following services:
Preparation and filing of Personal (T1) & Corporate Tax Return (T2) — the core requirement.
Preparation of financial statements / balance sheets / statements of income & expenses / shareholder equity / retained earnings.
Preparation of required schedules, e.g. tax schedules, statements for dividends, shareholder loans, capital cost allowance (CCA), asset depreciation, etc.
Possibly GST/HST returns (if required), if you are registered.
Bookkeeping cleanup if books are messy.
Advisory or strategic tax planning (especially for incorporated professionals/freelancers).
Because of this, the fee depends on the workload (time, complexity) — not a fixed “flat-rate” in many cases (though some accountants may offer a flat-fee package for simple cases).
Typical Fee Ranges in Canada (and Québec)
Based on published data from accounting service providers in Canada (including Québec), approximate ranges are:
Notice the wide spread: from a few hundred dollars (if you do it yourself and have minimal needs) to several thousand dollars (for medium complexity), and potentially more for large or complicated corporations.
For incorporated small businesses needing regular bookkeeping, multiple returns, payroll, and GST/HST compliance, corporate tax and reporting costs (including bookkeeping) might range CAD 2,500–5,000+ per year.
Importantly: “tax filing fee” is not just the cost to submit a T2 — it often includes building the set of financial statements and supporting documentation that the tax return relies on.
Realistic Annual Corporate Tax-Filing Cost — What to Budget
Given the ranges above, here is a realistic budgeting guideline for a small to medium-size corporation based in Québec (or another Canadian province):
Minimal DIY case (no employees, simple revenue/expenses, no asset depreciation, no shareholder complexity, no bookkeeping): CAD 200–450 (software + your time).
Basic accountant-assisted filing (simple corporate structure, minimal complexity, basic bookkeeping): CAD 500–1,000.
Typical small business corporation (standard income & expenses, maybe a couple of assets, normal bookkeeping): CAD 800–1,500.
Moderately complex corporation (assets, depreciation, some investments, modest bookkeeping, maybe shareholder considerations): CAD 1,500–3,000.
Complex corporation (multiple sources of income, payroll, GST/HST, multiple shareholders, investments, significantly advanced bookkeeping): CAD 2,500–5,000+.
3. Factors That Influence Corporate Tax-Filing Fees (Complexity & Scope)
Why is there such a wide spread in corporate tax-filing fees? Because many factors can make the work of an accountant/CPA more — or less — demanding. Below are the key variables.
Complexity of the Business Financials
Number and type of income streams: If your corporation has multiple clients, sources of revenue, or different business lines (e.g. consulting + product sales + rental income), the complexity increases. More invoices, more expense categories, possibly inventory, GST/HST, etc.
Assets and depreciations / capital cost allowance (CCA): If your corporation owns assets — e.g. a vehicle, equipment, furniture — then you need to track depreciation, CCA claims, write-offs, which complicates the accounting and tax return.
Expense types and deductions: Are there many deductible expenses, investments, shareholder loans, intercompany transactions, related-party transactions? The more “special” or unusual the expenses/investments/transactions, the more work for the accountant.
Bookkeeping quality / completeness of records: If books are complete, organized, and digital — easier and cheaper. If there are missing receipts, paper records, unorganized expenses — that’ll require cleanup, reconciliation, possibly hours of work.
Corporate Structure & Ownership Complexity
Number of shareholders / share classes: A simple single-owner corporation is easier to handle. Once you have multiple shareholders, different share classes, dividends, shareholder loans, inter-corp transfers, things get more complex.
Use of dividends/salary/shareholder loans: Paying yourself (or others) via dividends or shareholder loans, or a combination of salary + dividend — adds complexity to return and requires careful tracking and reporting.
Inter-company transactions / multiple corporations: If you have more than one corporation (holding company, operating company, family trust, etc.), or there are related corporations, the filings become more complex, often requiring consolidated statements or more careful planning.
Compliance Requirements & Reporting Needs
Financial statements requirement: Some clients (banks, investors, lenders) may need a full set of financial statements (balance sheet, statement of retained earnings, income statement). If you need professionally prepared statements (Notice to Reader, Review Engagement, or Audit), cost increases significantly.
GST/HST, payroll slips (T4), other returns: If you’re registered for GST/HST, or you have employees (so need to issue T4 slips), you require more work: bookkeeping, payroll remittances, payroll reporting, compliance — which adds to the cost.
Audit risk, corrections, CRA correspondence & complexity: If there are past errors, CRA audits or more complicated tax positions, accountants may need to spend more time, adding to fees.
Year-end cleanup, adjustments, reconciliation: At year-end, you often need to reconcile bank statements, unpaid invoices, accruals, prepaid expenses, etc., which can be time-consuming depending on bookkeeping habits.
Location & Professional Rates
Province or city: Accountants in major urban centers (e.g. Montréal, Toronto) may charge higher rates than those in smaller towns.
Type of accountant / credentials: A professional/generalist or junior accountant may charge less; a fully qualified CPA or a firm specializing in corporate filings may charge more.
Billing model: hourly vs flat fee: Some professionals/accountants charge hourly — costs can vary widely depending on hours spent. Others offer flat-fee packages for standard corporate filings.
Frequency & Scope of Services
One-time annual filing vs ongoing services: If the professional/accountant only does year-end tax filing, cost is lower. If you outsource bookkeeping, payroll, GST/HST remittances, quarterly reviews — costs add up.
Record-keeping burden during the fiscal year: The more you outsource throughout the year (bookkeeping, payroll, bookkeeping cleanup), the easier the year-end filing — but you’ll pay for those ongoing services.
Support services beyond filing: Tax planning, advice on dividends vs salary, incorporation of benefits, retirement plans — these add to professional fees.
4. Estimating Payroll Fees
If your corporation will pay employees (including paying yourself as an employee), you’ll likely want to outsource payroll processing — especially if you prefer to avoid manual calculations, remittances, T4 slips, etc. Payroll fees vary depending on complexity (number of employees, frequency, benefits, withholdings).
Based on typical Canadian accounting service practices, payroll/service costs are often influenced by the same factors: complexity, number of employees, frequency, benefits, remittances, etc.
Typical Payroll & Related Service Costs
According to accounting-service cost industry data:
For small businesses with minimal payroll (e.g. owner only, or a few employees), payroll processing might be part of a flat monthly service fee. Some small-business bookkeeping or payroll services estimate CAD 200–1,000/month depending on volume of transactions and payroll frequency. Payroll for a single employee could range between $25-$35 from weekly to bi-weekly and monthly payroll.
For larger or more complex payroll (several employees, benefit deductions, multiple remittances), costs can increase accordingly — bookkeeping + payroll services might be more substantial.
Also, for small businesses with only a few transactions and limited payroll needs, the overall annual accounting/bookkeeping + payroll + tax filing packages (combined) can run to CAD 2,500–5,000+ per year.
What to Budget — A Rough Guideline
If you outsource payroll for a small corporation (owner + maybe 1–2 employees), you might expect:
Monthly payroll & bookkeeping service: CAD 200–600 (depending on frequency and number of employees)
Annual payroll + year-end reporting & T4s + corporate tax filing + bookkeeping: In modest cases perhaps CAD 2,000–4,000/yr (assuming minimal complications).
If payroll is more extensive (multiple employees, benefits, withholdings, frequent pays, more bookkeeping): higher — maybe CAD 4,000–6,000+/yr depending on services included.
If you only have yourself on payroll and minimal payroll activity, the incremental cost of payroll (when combined with corporate tax filing) may be modest — but if you hire staff or have contractors, expect higher ongoing costs.
5. Putting It All Together: What Could Your Business Pay in the First Year vs Subsequent Years
To make this concrete, let’s model a few hypothetical scenarios for a small business / incorporated freelancer, based in Montréal/Québec (or similar), and estimate what the first-year and subsequent-year costs could look like.
Scenario A — Solo freelancer / consultant, no employees, simple income / expenses, minimal bookkeeping
Incorporation: DIY (federal or provincial) → CAD 200–400
Year 1 tax filing + minimal bookkeeping (DIY or simple software): CAD 200–400
Payroll: none (you don’t draw salary, or only dividends)
Estimated first-year cost: ~ CAD 400–800
Estimated ongoing annual cost: ~ CAD 200–400
This is the absolute minimal-cost scenario, best only if you’re comfortable doing your own bookkeeping and taxes. Any bookkeeping costs would definitely be added extra to these amounts.
Scenario B — Solo incorporated professional, uses a service provider for incorporation, minimal bookkeeping, no employees
Incorporation (via incorporation service or lawyer): CAD 700–1,200
Corporate tax filing by accountant (simple structure): CAD 500–1,000
Payroll: none
Estimated first-year cost: ~ CAD 1,200–2,200
Estimated ongoing annual cost (tax filing only): ~ CAD 500–1,000
Scenario B is realistic if you want compliance done properly but still have a simple business structure. There is no or minimal bookkeeping involved.
Scenario C — Small business with modest activity (some revenues/expenses, small assets, maybe occasional investments), no employees
Incorporation: CAD 700–1,500 (if using professional setup)
Corporate tax + annual filing + financial statements (modest complexity): CAD 1,000–2,000
Basic bookkeeping support during the year (quarterly or yearly) — maybe extra fees depending on provider
Estimated first-year cost: ~ CAD 1,700–3,500
Estimated ongoing annual cost: ~ CAD 1,000–2,500
Scenario C reflects a “growing but still small” corporation, where you prefer the hands-off approach and outsource bookkeeping + tax filing.
Scenario D — Corporation with employees (owner + 1–3 staff), regular operations, some assets, some GST/HST, multiple expenses
Incorporation: CAD 800–1,500
Bookkeeping + payroll services (monthly) — say CAD 200–600/month = ~ CAD 2,400–7,200/yr
Year-end tax filing + financial statements + compliance: CAD 1,500–3,000 (or more)
Payroll-related annual fees (reporting, T4 slips, remittances) included in bookkeeping/payroll services
Estimated first-year cost: ~ CAD 4,700–11,700 (depending on payroll volume and complexity)
Estimated ongoing annual cost: ~ CAD 3,500–10,000+
Scenario D is closely realistic for small businesses with staff, moderate complexity, and desire for outsourced bookkeeping/payroll/tax services.
6. Why Fees Vary — Key Determinants & What to Watch Out For
As illustrated in the scenarios above, there’s no one-size-fits-all. Whether you end up paying just a few hundred dollars a year — or several thousands — depends on a combination of factors. Here’s a breakdown of what to watch out for / what to clarify when you engage a service provider:
What exactly is included in “tax filing” fee? Is it just preparing the T2 and filing it? Or does it include full financial statements, balance sheet, depreciation schedules, GST/HST, bookkeeping cleanup? Always clarify scope.
How complete are your records? Clean, digital, organized books = less work, lower fees. Messy or incomplete records can double or triple work hours.
How many services are bundled? If you outsource bookkeeping, payroll, GST/HST, year-end statements, the total fee will reflect all those needs — not just tax filing.
Complexity of business structure: More shareholders, share classes, related-party transactions, investments, multiple income streams, assets — all add cost.
Payroll and compliance requirements: Even a small number of employees adds complexity (remittances, slips, payroll records, source deductions, CPP/QPP, EI, provincial requirements).
Professional level of accountant / CPA / service provider: More experienced or specialized professionals charge more; but they may save you more in tax planning, compliance, and avoiding errors.
7. Why It Matters — The Hidden Cost of Incorporation & Maintenance
One of the common misconceptions among new business owners — especially freelancers or part-time self-employed — is that incorporation is cheap and maintenance is easy. But many underestimate the ongoing compliance, bookkeeping, and administrative burden (and cost).
For example, when you factor in bookkeeping, payroll (even minimal), GST/HST filings, year-end tax filings, plus the time — having a corporation involves more ongoing admin and cost than a sole proprietorship. A corporation with Nil Income may also end up spending upto $250 yearly inclusive of Corporate Tax and its Annual Filing if done by a professional, although DIY options also exists which could cost one upto $60 at max to file their own Corporate Tax Return.
From a long-term perspective, these recurring costs have to be weighed against the benefits of incorporation (liability protection, potential tax deferral, credibility, easier to bring on partners or scale).
For a service-based business, consulting/contracting, or a small rental/business-income operation — you need to realistically estimate your revenue, number of transactions, payroll needs (if any), and complexity of operations before committing to incorporation.
8. How This Fits with Services like “Incorporation Assistance”, Corporate Tax Filing, Payroll Assistance (like your payment links)
Given the services offered — including incorporation assistance, corporate tax filing, payroll — you may find a rought quote price.
When offering Incorporation Assistance: “Your baseline federally or provincially is CAD 200–500 in registry fees; we add our service cost to prepare the documents, minute book, share structure, and deliver a compliant incorporation package — typically total cost CAD 600–1,200 depending on complexity.”
For Corporate Tax Filing: from a “simple return” (for small, single-shareholder corp with minimal transactions) to “full return + financial statements + GST/HST + bookkeeping cleanup + advice.” This allows you to choose based on your complexity and budget.
For Payroll Services / Payroll + Bookkeeping Packages, we can bundle monthly bookkeeping / payroll processing / remittances / year-end T4s / tax filing. Provide clients with a clear monthly or quarterly fee.
Using transparent fee ranges and explaining what drives cost (complexity, number of employees, bookkeeping quality, asset depreciation, frequency of transactions) builds trust and helps you budget realistically as well.
9. Key Recommendations For Business Owners Considering Incorporation
Based on the cost dynamics above (for professionals, self-employed, small business owners) here are some recommendations before you incorporate:
Do a cost vs benefit analysis — Estimate your revenue, expenses, likely number of transactions, potential payroll needs. If business is very small, or transactions low, the cost of maintaining corporation might outweigh benefits.
Start lean — DIY or minimal service — then scale up — If you’re just transitioning from self-employed to incorporated and expect low activity, consider doing a minimal-cost incorporation (government-only or basic service). As your business grows, upgrade bookkeeping or payroll support.
Keep clean, organized financial records from the start — Digital bookkeeping, organized receipts, regular tracking of income/expenses reduces accountant time (i.e. lowers fees).
Choose the right accountant / service provider for your complexity — For simple corps: a generalist accountant may suffice. As soon as things get more complex (assets, payroll, multiple shareholders etc.), a qualified CPA or specialized firm is worth the extra cost.
Bundle services where possible — Many firms offer bundled bookkeeping + payroll + tax filing packages; these can sometimes be more cost-effective than standalone services.
Plan for ongoing maintenance — not just one-time setup — After incorporation, expect at least annual tax filings, possibly quarterly bookkeeping, GST/HST filings (if applicable), and payroll processing (if you have staff). Budget for those before incorporating.
10. Finally
Incorporating a business in Canada can bring important legal and tax benefits — especially for consultants, incorporated professionals, and small-business owners looking to scale. But incorporation isn’t “free”: it involves upfront costs — registry fees, possible professional fees — as well as ongoing costs for bookkeeping, compliance, tax filings, and payroll (if needed).
As we’ve seen: depending on your business size, complexity, and whether you outsource services, the first-year cost can range from a few hundred dollars (in minimal DIY cases) to several thousands (for more active businesses). And subsequent years often carry annual compliance/filing/bookkeeping fees — something many new business owners underestimate.
For newly incorporated professionals, single mothers, immigrants, self-employed — it’s especially important to have a clear, transparent fee estimate upfront. That helps avoid surprise costs, sets realistic expectations, and builds trust.
11. Example Cost Table for Quick Reference
(These are rough estimates — actual costs may vary based on province, service provider, business complexity, bookkeeping habits and costs of our Softwares keeping inflation in mind.)