This is one of the most common questions entrepreneurs usually ask and it really depends on a few things. There is no 'one-size fits all' answer and as always, it's better to consult with a professional before making a final decision. However, here is a general overview of the main differences to be considered.
According to CRA, the definition of a sole proprietorship is: "an unincorporated business that is owned by one individual. It is the simplest kind of business structure."
1) Lower start-up costs
2) More freedom in terms of regulations
1) Unlimited liability - essentially you will assume all debts and obligations. A creditor could come after your personal assets
2) No business name protection
3) More difficult to raise capital if ever required
CRA defines a corporation as "a separate legal entity. It can enter into contracts and own property in its own name, separately and distinctly from its owners."
1) Limited liability
2) Possible tax advantages (small-business deduction)
3) Could be easier to raise capital
4) Name protection
5) Easier to manage your personal income should you choose to declare dividends / bonus (additional options)
1) Closely regulated
2) Record keeping might be more extensive
In addition to the above, each setup has implications on the way your income is reported which is another element that should be considered upon making the decision and is based on your personal situation.
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