well I've always been incorporated too, so here's what I've experienced:
- business bank accounts in USD & CAD, so monthly bank fees.
- corporate tax filing, accountant fees can be $1000+ depending.
- CRA may tell you to pay monthly tax installments based on previous year's income, so you may not even be making income this year and yet they're telling you to make installments. Sales are streaky after all... I have just always ignored those though and pay up at the end of each year.
- Collecting GST/HST could be considered a con because it forces the buyer to pay more for your domain. In theory they too get the money back as a GST credit paid, and big companies don't balk at this. But its sometimes a mental barrier for smaller buyers that they're paying more, which you in turn might be inclined to lower your price to make a deal. That's why I only negotiate on selling price, and in the initial discussion, I always say the price is $$$$$ plus GST or HST if applicable.
- You will pay corporate taxes on profits, but can leave profits in the company to invest or hold. As a sole proprietor, I believe you have to declare it all as income every year. So if you have a primary job and you score a 6-figure sale on top of it, you will get bent over by the tax-man as he screws you and simultaneously steals all the cash from your wallet.
- If you want to take profits out, you can take it as a dividend rather than wage/salary/etc, avoiding some extra taxes.
- Get a GST # and you get credit for all the GST you pay on domain renewals and purchases, against any GST you collect on sales. If you're acquiring more than you're selling (or your big sales are US based and therefore didn't collect as much GST as you paid out), then CRA will send _you_ a check for the difference.
- Of course you can write off expenses, such as home office space, utilities, internet, cell phone, etc... but I presume you can do that as a sole proprietor too.
- If you've been doing this a while, you already have assets. So when you incorporate, any money or domains given to the company to get started would technically be personal assets that you transfer in, which is basically a loan. You'll want to value those assets with a reasonable value that you can document, like, maybe do the GoDaddy valuation, take a PDF of it and store it. That might be too generous, but you can say its wholesale value is say 25% or whatever you feel you can justify. Anyways, discuss that with a tax guy and _document_the_heck_ out of all your assets you're putting into the company. Then, you get to take all that value back out of the corporation, tax free, at your convenience, because it was all just a personal loan. Technically I guess the company would be buying the domains from you, and putting it on the books as debt owed to you. For an established domainer who isn't incorporated yet, this could actually be a big tax win, as you'll be forced to valuate your portfolio at a wholesale price which hopefully will be much greater than your actual price (since you may have been sitting on some of these for a decade or more). This is all just thinking off the top of my head here, I've never done this, but now that I think about it, I don't know why this wouldn't be legit. Dang, not a bad idea for anyone not incorporated yet but that has a big portfolio. If anyone discusses this idea with a tax guy, let me know because now I'm curious what they say.