An incorporated consultant serving one client risked a personal services business assessment. We restructured to protect their deductions.
An IT consultant incorporated to serve a single former employer, on-site and under direction, squarely in personal services business territory, which would have denied the small business deduction and most expenses. We diversified the client base, corrected the engagement terms, and documented genuine independence. The changes removed the PSB exposure and preserved the corporate tax advantages.
Professional practices are taxed on work in progress and face personal services business risk where one client dominates.
The first fiscal year-end must fall within 53 weeks of incorporation and sets every filing deadline that follows. Share structure decided at incorporation governs who can receive dividends later.
Why it bites: Year-one choices are cheap to make and expensive to undo. Restructuring share classes after value has accrued triggers its own tax consequences.
A CCPC files its T2 within six months of year-end, with the balance due two months after (three where the small business deduction is claimed). The 9% federal small business rate applies to the first $500,000 of active business income.
Why it bites: The filing and payment deadlines differ, and interest runs from the payment date. Filing on time while paying late still costs money.
Every engagement above was priced as a fixed fee agreed before the work started, and paid only once the client had reviewed the result. If any of this looks like your situation, the first step is a free 15-minute call — we will tell you plainly whether there is anything worth doing.
Reviewed for the 2025 tax year by Udit Gupta, Certified Tax Accountant. Figures describe a real engagement; outcomes depend on your own facts. Client details are omitted for confidentiality.
