Can I convert my sole proprietorship into a corporation later?

Yes. You can incorporate at any point and transfer your sole proprietorship business into the new corporation. This is a common path — many businesses start as sole proprietorships and later incorporate once the benefits outweigh the costs.

The transfer process involves more than just registering a company. You need to decide which assets and contracts move into the corporation, update contracts with clients and suppliers, open new business bank accounts, and re-register for HST in the corporation's name. Any leases or significant agreements may need the landlord or counterparty's consent to assign.

From a tax perspective, transferring assets — such as equipment, inventory, or goodwill — can trigger a disposition at fair market value, which may create a taxable gain. A section 85 rollover under the Income Tax Act (federal) allows you to transfer eligible property into the corporation on a tax-deferred basis by electing a specific transfer price. This is a common tool but requires careful planning and must be done correctly to be effective. Working with an accountant and lawyer together is strongly recommended.