Procurement is the trigger, not revenue
A fee-only designer carries professional risk that insurance mostly answers. A studio that procures carries commercial risk too: deposits that must be refunded if a project collapses, trade accounts with suppliers who expect payment whether or not the client pays you, a marble table that arrives cracked after your carrier signed for it. As a sole proprietor, every one of those obligations is personally yours, house and all. A corporation signs the client contracts, holds the deposits, opens the trade accounts and owns the claims, while insurance keeps doing its separate job. The structure is not a substitute for good contracts; it is the backstop for the day a contract is tested. Our Incorporation service sets that structure up properly the first time.
ARIDO does not require a professional corporation, and that simplifies things
Unlike medicine, law or architecture, interior design in Ontario has no professional-corporation regime, so there is no restricted shareholder list and no annual certificate of authorization to maintain. A standard Ontario corporation does the job. Your ARIDO registration, title use and professional liability coverage remain personal to you as the designer; the company is simply the business that employs you and contracts with clients. The main naming caution is ordinary rather than regulatory: clear the studio name against existing marks and domains, or incorporate numbered and register the brand as a trade name.
What moves where on day one
Incorporation is a change of who does business, and procurement makes the handover more mechanical than it is for a fee-only practice. The sequence matters, because a deposit taken personally cannot simply be spent by the company.
| Item | On incorporation |
|---|---|
| Client contracts and new deposits | Signed by and paid to the corporation from day one |
| Supplier trade accounts | Reopened in the corporate name so trade pricing and terms bind the company |
| HST registration | The corporation registers fresh; your sole-proprietor number does not transfer |
| Insurance | General liability and professional policies reissued to name the corporation |
| Sample library, hardware, vehicle | Rolled into the company, with a section 85 election where value has grown |
Projects that straddle the change get a clean cut: the proprietorship finishes what it invoiced, the corporation takes what comes next, and the books record which entity holds which deposit. Started sloppy, that split is a year-end argument; started clean, it is a checklist. Suppliers handle the transition routinely when asked in advance, and asking in advance is the entire trick.
The tax mechanics arrive with the structure
Once profits exceed what you need to live on, the corporation pays Ontario's combined small-business rate of roughly 12.2% on the first $500,000 while the surplus stays invested in the company, instead of everything being taxed in your hands at personal rates that climb past 50%. You choose salary, dividends or both, on your timetable. And if the studio one day sells as a going concern, with its trade relationships, team and client list, share sale proceeds can shelter under the $1.25 million lifetime capital gains exemption, provided the corporation is kept onside for years before the sale, not months. How to draw the money out each year is its own decision, and our Tax Planning & Advisory work handles it annually.
Share structure deserves ten deliberate minutes at the start rather than a lawyer's bill later. Whether a spouse should hold shares depends on TOSI and on how involved they genuinely are in the studio; two designers founding together need a shareholders' agreement that answers who buys whom out before a disagreement makes the question expensive. These decisions are cheap on day one and painful to retrofit.
Done in order, quoted in writing
We incorporate the company, register the HST account, set the fiscal year-end around your project rhythm, and stand up the books so deposits and landed costs are tracked correctly from the first purchase order, with End-to-End Accounting ready if you want the whole back office in one place. The work is quoted in writing after a free 15-minute discovery call at our Mississauga office or by video. What you should not do is take the next six-figure procurement project personally because incorporating felt like a winter task.
