What share structure should I set up when I incorporate in Ontario?

The share structure you set up on incorporation affects how you can plan for taxes, bring in investors, split ownership, and exit the business. Getting it right from the start is easier than reorganizing later, which can trigger tax consequences.

For a simple sole-shareholder corporation, a single class of common shares with unlimited authorization is often sufficient. But even for a one-person company, there can be value in creating multiple classes — for example, Class A and Class B common shares, or a common and preferred share class — to allow future flexibility for income splitting with a spouse or family members, bringing in business partners, or implementing an estate freeze down the road.

If you are incorporating with a co-founder or business partner, the share structure should reflect your ownership split and, combined with a shareholder agreement, define each person's rights and obligations from day one.

Key decisions include: how many classes of shares to authorize, what rights each class carries (voting, dividends, capital on wind-up), and whether the articles should include any transfer restrictions. These decisions are made in the articles of incorporation, which are filed with the Ontario government. Changes later require a formal amendment. Working with a corporate lawyer at the incorporation stage is one of the most cost-effective investments you can make in the long-term structure of your business.