Incorporating or Restructuring Your Business

Incorporating a sole proprietorship, changing a corporation's year-end and closing one down all mean paperwork with the CRA and BC Registries. Some steps have to happen before others, so look at the whole list before you start.

Incorporating in BC

A corporation is a legal entity separate from the people who own it. It can own assets, take on debt, sign contracts, and sue or be sued. You don't have to incorporate. BC Registries sets out these steps:

• Confirm the structure. The province suggests advice from an accountant or lawyer first, because a corporation has records to set up, such as a minute book, a central securities register and a transparency register.
• Request and reserve a name ($30). The name has to include a corporate designation such as Inc. or Ltd.
• Set up the articles, the rules for the company, its shareholders, directors and officers.
• Sign an incorporation agreement. Each incorporator signs it and agrees to take one or more shares.
• Apply to incorporate. Most companies apply through Corporate Online for $350.

Those fees are from the province's page as last updated September 24, 2026. After that, the company has to keep its annual reports with the BC registry up to date.

What changes with the CRA

Going from sole proprietorship to corporation is a change of legal status, and in most cases that means new CRA accounts. The corporation gets its own business number (BN) and corporation income tax account. Depending on where you incorporate, the CRA may register these automatically. If it doesn't, you call the CRA at 1-800-959-5525.

Your GST/HST and payroll accounts on the old BN don't move over by themselves. You register new ones on the corporation's BN if it needs them, then close the old BN and its accounts.

• Income tax. The corporation files its own T2 return for every tax year, even when there's no tax to pay, within six months of its year-end. Our post on corporate tax returns goes through it.
• GST/HST. If the corporation needs to charge GST, it registers a GST/HST account on its own BN and reports its sales there. Our post on GST filing has more.
• Payroll. If the corporation will have payroll, it needs a payroll account on the new BN. How you pay yourself out of the company is a separate decision, covered in salary versus dividends.

Moving assets in: the section 85 election

Handing your equipment, vehicles or other business property over to the new corporation is a disposition for tax purposes. Section 85 of the Income Tax Act lets you and the corporation jointly elect the amount the transfer happens at (the "agreed amount"), as long as the property is eligible property and what you get back includes shares of the corporation. That amount becomes your proceeds and the corporation's cost, and the Act adjusts it if it's set too high or too low compared with the property's fair market value and the non-share payment you receive.

• The election is made on Form T2057, filed jointly by you and the corporation.
• It's due by the earliest filing due date of any of the parties making the election, for the tax year the transfer happened in.
• A late election can still count if it's filed within three years after that date and an estimate of the penalty is paid with it. Past that, it's accepted only where the CRA considers it just and equitable.

Which assets qualify and what amount to elect depend on the business. Get advice on this step before anything is signed.

Picking or changing a year-end

As a sole proprietor, you generally report business income on a calendar year. A new corporation declares its year-end on its first T2 return. Its first tax year starts on the date of incorporation, and no tax year can be longer than 53 weeks (371 days).

After that, the year-end generally stays put. To change it, write to your tax services office asking for approval, with the reasons for the change and the date it would take effect. Some changes don't need approval, for example a dissolved corporation filing its final return with a shorter last year, or a year that ends because someone acquired control of the corporation.

Winding up or dissolving

• Payroll. Before closing the payroll account, remit all source deductions, file the final information returns, and give T4 or T4A slips to former employees.
• GST/HST. The GST/HST account is closed separately.
• Dissolution. Send an application for dissolution to the government body that governs the corporation. For a BC company, that's a voluntary dissolution filed through the BC Business Registry or Corporate Online, depending on where the company is set up. The fee is $20 either way.
• Tell the CRA. Once it's dissolved, check Form RC145, Request to Close Business Number Program Accounts, to see if you need to send it along with a copy of the articles of dissolution. Otherwise the CRA treats the corporation as still existing, and it still has to file a return even with no tax payable.

The BC registrar can also dissolve a company that doesn't file its annual report for two consecutive years, so a company you plan to keep needs those reports filed.

How we help

Whether to incorporate is one of the questions we sit down with in our consulting work, and restructuring is part of the same conversation. On the filing side, we do corporate year-ends and returns, and corporate registry, GST and payroll filings.