What is a corporation and how is it different from me personally?

A corporation is a separate legal person created by law. When you incorporate in Ontario under the Business Corporations Act (OBCA) or federally under the Canada Business Corporations Act (CBCA), the new entity can own property, sign contracts, hire employees, and incur debts in its own name — all distinct from you personally.

This separation is called the corporate veil. In most situations, a creditor of the corporation cannot pursue your personal assets to satisfy a corporate debt. That shield is one of the main reasons entrepreneurs incorporate, though personal guarantees, director liability rules, and other exceptions can pierce or bypass it in certain circumstances.

The corporation files its own tax return and pays corporate income tax at rates that differ from personal rates. You, as a shareholder, are only taxed when money flows from the corporation to you as salary, dividends, or other distributions. Understanding the tax mechanics is important — a lawyer and an accountant working together can help you structure things efficiently.