Does incorporating in Ontario fully protect me from personal liability?

Incorporation provides meaningful but not unlimited personal liability protection. Understanding the limits is just as important as understanding the protection.

The general rule is solid: a shareholder is not personally responsible for the corporation's debts simply by virtue of being a shareholder. If the corporation cannot pay its debts and goes insolvent, creditors generally cannot come after your personal assets.

However, several exceptions exist. If you personally guarantee a loan, lease, or supplier contract, you are liable on that guarantee regardless of your corporate structure. Banks and commercial landlords routinely require personal guarantees from small business owners. Directors (as opposed to passive shareholders) can be personally liable for unpaid employee wages up to certain limits, HST and payroll remittances the corporation failed to pay to the CRA, and some environmental obligations. Courts can also "pierce the corporate veil" — set aside the liability shield — when a shareholder has used the corporation as a sham or for fraud.

Keeping your personal and corporate finances strictly separate, maintaining your minute book, and not personally guaranteeing obligations unless necessary are the main ways to preserve the protection incorporation offers.