Retained earnings are restocking power
The corporation's headline benefit for this trade is not a lower lifetime tax bill; it is speed. At roughly 12.2% combined on the first $500,000 of active profit, a dollar earned and kept in the corporation puts about 88 cents into the next buying trip. Earn that dollar as a sole proprietor at a high personal marginal rate and the trip shrinks. For a business whose growth is literally measured in showcases, the gap compounds: the corporation is how a one-case counter becomes a full store without leaning on credit for every restock. Incorporation is the mechanism; the discipline of leaving profit in is the strategy.
The honest counterpoint: if the store's profit is still fully consumed by the household, the deferral has nothing to work with, and we will say so. A sole proprietor with growing margins can wait a year and lose nothing but paperwork.
Moving an existing store in without a tax bill
Most jewellers incorporate a store that is already running, and the inventory is the complication: transferring appreciated stock to a new corporation is a disposition unless it happens under a section 85 rollover, with a T2057 election filed to move inventory, bench equipment and goodwill across at cost. Done properly, the move itself triggers nothing.
The rollover is the easy half. The re-papering is where stores get hurt: memo goods belong to your suppliers, and those agreements must be re-signed with the corporation, with each supplier's consent, or the goods in your case sit under a contract with an entity that no longer trades. The jewellers block policy has to be reissued in the corporation's name before day one, the lease assigned, the financing-program merchant agreements redone, and a fresh HST registration opened under the new business number. We run this as a checklist through our Corporate Restructuring work so no coverage gap opens between the old name and the new.
| What moves to the corporation | How it moves |
|---|---|
| Inventory and bench equipment | Section 85 rollover at cost, T2057 election filed |
| Goodwill and the store name | Included in the rollover; name registered to the corporation |
| Memo and consignment agreements | Re-signed with each supplier's and consignor's consent |
| Jewellers block insurance | New policy in the corporation's name from day one |
| HST and payroll accounts | Fresh registrations under the corporation's business number |
| Premises lease | Assignment with the landlord's consent |
What the corporation protects, and what it does not
A corporation puts the lease, supplier accounts and trade debts at arm's length from your home, which matters in a business that can owe suppliers six figures for memo goods after a bad season. Be clear about the limits, though. The bank will still want personal guarantees at the start; customer jewellery in your vault is protected by insurance and intake records rather than by any structure; and municipal licensing and FINTRAC obligations for gold buying follow the activity, not the entity. Incorporation reorganizes obligations. It does not replace the jewellers block policy or the buy book.
Shares built for the family and the exit
Set the share structure up on day one, when it costs little, instead of reorganizing later. Separate share classes give dividend flexibility if a spouse works the counter, with the caveat that TOSI restricts dividends to family members who are not genuinely active in the store. A corporation also gets to choose its year-end; one in late January puts the physical count in the quietest week of the trade, after the holiday exchanges have settled.
And a jewellery store sells. Inventory, goodwill and a trained bench make it a going concern a buyer can finance, and if the corporation qualifies at the time of sale, each shareholder's lifetime capital gains exemption, now $1.25 million, can shelter the gain on the shares. That outcome is designed years ahead through Tax Planning & Advisory, not discovered at the listing.
What we set up
Articles with a considered share structure, the minute book, business number, HST and payroll accounts, the section 85 paperwork where an existing store is moving in, and a first-year calendar covering the T2, HST and instalments. Fixed scope, quoted in writing after a free 15-minute discovery call, from our Mississauga office for jewellers across the GTA.
