I live in Canada and for the last 2 years I was doing contract development under a federally incorporated business.

But now I am full time and wondering what I need to do with my incorporation. I would like to keep it open in case I do side projects or eventually go back to contracting.

I've read that I need to "fire" myself otherwise I will have to continue paying into CPP/EI. Is this correct? How can one determine what one must do with an incorporation when moving to a full time job?


Firing yourself just means suspending/cancelling your payroll account, which is a simple phone call. A corporation is a little bit expensive (bank fees + annual report filing cost), but not as expensive as making a new one if your situation changes in less than 7-8 years.

  • thank you! I opted to dissolve the corporation to simplify
    – Morgan T.
    Dec 9 '13 at 21:46

The rules in (and therefore the required answer for) Canada are probably different from the UK, but this answer gives my experience from a UK perspective, and will hopefully be of help.

Obviously, you will be becoming an employee of another company - but there is nothing to stop you remaining an employee of your own company too. In the UK, payroll taxes and deductions (collectively known as Pay As You Earn) are calculated on your salary, so assuming no payments are made, then no PAYE taxes are due. It may be different in Canada. Your local tax office should be able to give suitable guidance!

As for the company - in the UK you have two options

  1. Make the company dormant
  2. Dissolve the company

Making a company dormant is straightforward... you don't actually have to do anything! However, you will still have to file appropriate accounts and periodic Returns (Companies House and Inland Revenue for VAT, PAYE and corporation tax). The company can be resurrected immediately if required.

To close down a company is a little bit more cumbersome... you have to notify the tax authorities (in UK this is three separate branches of our Inland Revenue, covering VAT, PAYE and Corporation Tax) plus any creditors, and file a Notice to Strike Off (and Companies House) with the appropriate nominal fee... assuming there are no problems, the Inland Revenue will agree to the closure, and the company will be closed by Companies House. Note: from personal experience this takes approx 18 months!

Again, talk to your local tax office and/or company registration authority - they will give the best (unbiased) advice.

Good luck! And perhaps you could post your findings...!

  • Thank you for the excellent answer! Although it seems very relative, I'm not sure if I could accept it as the answer as it is not specific to Canada... I'll let you know what I discover though.
    – Morgan T.
    Jul 29 '13 at 15:21

As the contributions are paid on your self-employed income (if any) from a corporation I was wondering why would you have to pay them? No self-employed income - no contributions. You'd still have to file payroll forms/reporting though for the corporation.

Your full-time employer will deduct and pay CPP/EI contributions on your salaried income.

Disclaimer: I'd talk to your accountant if I'd be you - that's what they get paid for. You can also call CRA hotline for clarifications.

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