Small businesses enjoy a favorable tax environment in Canada. Take advantage of it. Certain kinds of corporations enjoy very low tax rates for the first $500,000 in business income, and the tax rates are dropping.
Use your corporation to average your personal income. If your personal income fluctuates between tax brackets your tax savings can be dramatic.
Defer taking personal income by leaving income in the corporation. Since the tax rates in corporations are usually less than one-half of the personal tax rates, you have use of money which would otherwise have been paid to the government until you pay the money out of the corporation to yourself.
Use your corporation to split capital gains by giving shares in your corporation to your spouse and children. Spouses and children accrue capital gains by holding shares in your corporation and selling them in the future at a profit.
There is a $750,000 lifetime capital gains exemption available for capital gains earned from the sale of shares in a qualifying small business.