Nine questions. A structured, honest assessment of whether a Holdco makes sense for your situation, including the trade-offs to discuss with your advisors.
Our commitment: Setting up a Holdco typically costs $5,000 to $10,000 in combined legal and accounting fees, with $2,500 to $4,500 in ongoing annual costs after that. That money goes to advisors who benefit from the complexity. We would rather you know whether the structure actually makes sense for your situation before you spend it. This tool will tell you when the answer is no.
1
What is the liability exposure of your operating business?
Note: incorporation already gives you limited liability. What a Holdco adds is a second legal barrier that protects your accumulated savings specifically, not your personal liability for your own conduct. If you operate a professional corporation (medical, dental, legal, engineering, real estate agent), share ownership rules under your regulatory body may restrict or prevent a standard Holdco structure. Ask your CPA about the specific rules that apply to your profession before assuming a Holdco is available to you.
2
How much has built up inside your corporation beyond what you need to run the business?
3
Are the retained earnings inside your corporation generating investment income (interest, dividends, or capital gains)?
Once passive investment income inside your operating company exceeds $50,000 in a year, your Small Business Deduction starts to erode the following year. This costs you the difference between a 12% and 26% corporate tax rate on up to $500,000 of active income.
4
Does your corporation hold assets beyond what you need to run the business day-to-day?
To claim the Lifetime Capital Gains Exemption ($1,275,000 in 2026) when you sell, 90% of your corporation's assets must be used in active business at the time of sale. Non-business assets silently erode this eligibility over time.
5
Do you plan to invest in real estate, other businesses, or build a meaningful investment portfolio using corporate funds?
A Holdco can lend money to your Opco or other businesses at a reasonable rate, own equity stakes in other companies, or hold a real estate portfolio. These activities keep Opco clean while allowing corporate capital to work harder.
6
What are your long-term plans for the business?
7
Do you have a spouse or adult children with meaningfully lower personal income than you?
A Holdco owned partly by a lower-income family member can allow dividends to be taxed at their lower marginal rate. This requires careful TOSI (Tax on Split Income) analysis to ensure the structure qualifies. Done correctly, annual savings can be significant.
8
Do you want to keep your operating company lean and separate from investments, real estate, or stakes in other businesses?
A clean Opco is simpler to value, easier to bring a partner or investor into, and better positioned for any transaction whether or not a sale is currently planned.
9
What is the approximate current fair market value of your business?
The $1,275,000 LCGE (2026, indexed annually) can be claimed tax-free on the sale of qualifying shares. When business value approaches this amount, it is often the optimal time to do an estate freeze: lock in today's value under your LCGE, and let future growth accrue to a Holdco or family trust. Acting before value exceeds the LCGE threshold produces the best outcome.
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Ready to talk through the right structure?
A Holdco decision involves legal, tax, and estate planning that goes well beyond this tool. Our team works through the full picture with you before recommending any structure.
Important disclaimer This tool provides general educational information only and does not constitute tax, legal, or financial advice. Holdco structures involve complex interactions between the Income Tax Act, TOSI rules, LCGE eligibility tests, and estate planning law. Every situation is different. Do not establish or restructure a holding company based on this assessment alone. Consult a qualified CPA and corporate lawyer before taking any action. Zenbooks Tax Services Professional Corporation is regulated by CPA Ontario.