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Accounting and tax planning for incorporated developers, software agencies, SaaS companies, IT consulting firms, and tech founders across Canada. Built for owners managing PSB risk, SR&ED claims, equity structures, and cross-border revenue.
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Many Canadian developers and software consultants operate as incorporated practices. They invoice the corporation, take a mix of salary and dividend, and reinvest retained earnings inside the company. Tax planning is what makes this structure work: deciding when to pay yourself in salary versus dividend, how much to keep inside the corporation, and how to plan for years where revenue spikes or drops sharply.
Beyond personal tax planning, software businesses face two recurring questions. The first is GST/HST and US sales tax: when to register, what to charge clients in different provinces, and what happens when customers are in the United States. The second is the classification of people who work with the business: contractors and employees are treated very differently for tax, payroll, and CPP/EI purposes, and getting it wrong creates retroactive exposure.
Salary vs dividend mix, RRSP/TFSA optimization, retained earnings strategy, and how the corporation funds personal goals over time. Income from software work tends to be uneven, with project peaks and quiet months, and tax planning needs to account for that volatility. Read more about tax planning.
When to register for GST/HST, what to charge clients in each province, and how to handle non-resident clients. For software companies selling to US customers, state-by-state sales tax obligations apply once economic nexus is reached, and that threshold can be hit faster than expected. Read more about GST/HST/PST.
When the agency or studio hires people to deliver work, the line between contractor and employee matters a lot. Misclassification creates retroactive CPP, EI, and source deductions for the corporation. Setting up payroll correctly when the relationship is actually employment prevents the issue.
Annual subscriptions paid upfront cannot be recognized as revenue all at once. Each month of service delivered is when the revenue can be booked. Mixing the two distorts the actual financial position, especially when the customer base is growing.
When to incorporate, how to set up the first invoice, what to do about benefits and RRSP, and how to structure the relationship with the first client. Decisions made in the first 90 days affect the structure for years.
When the threshold is crossed in the first US state, registration becomes mandatory. Each subsequent state has its own threshold, and the back-tax exposure compounds quickly. Setting up sales tax automation, registering correctly, and integrating with the billing system needs to happen before the customer count grows further.
Pre-deal planning matters more than most founders expect. Whether to do an asset sale or share sale, how to handle retained earnings or excess passive assets, and how to structure the next phase after the sale. Decisions that need to happen before negotiation, not after.
When the corporation is profitable, the question shifts to how to pay yourself in the most tax-efficient way. The mix of salary vs dividend, RRSP contribution room, CPP impact, and whether to use a holding company to retain earnings, all enter the planning.
Whether the new person is a contractor or an employee changes everything: payroll setup, CPP/EI obligations, source deductions, and benefits eligibility. Getting the classification right from the start prevents retroactive issues with CRA later.
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