Owner-Operator Trucking: Should You Incorporate Your Trucking Business? — CPA Firm Near You, Montreal

Introduction

Owner-operator truck drivers in Quebec face unique tax and business decisions — none more important than whether to remain a sole proprietor or incorporate. Incorporation can reduce taxes, provide liability protection, and build long-term financial stability, but it also introduces additional compliance requirements. This guide explains when truck drivers should consider incorporation, the tax advantages and drawbacks, and how a CPA firm near you in Montreal can help you choose the right structure.

Legal and Regulatory Framework

Under the Income Tax Act and the Taxation Act of Quebec, trucking businesses may operate as:
• Sole proprietorships
• Partnerships
• Corporations

A trucking corporation benefits from:
• Lower corporate tax rates (small business deduction)
• Tax deferral by retaining profits inside the company
• Flexibility to pay yourself through salary, dividends, or both
• Deductibility of business expenses
• Limited liability for business debts and contracts
• Improved credibility with carriers and logistics companies

However, incorporating also requires:
• Corporate tax filings (T2, CO-17)
• Payroll or dividend planning
• Corporate bookkeeping
• Annual resolutions and minute books
• GST/QST filings under the corporation

Key Court Decisions

Courts have ruled that:
• Corporations must respect proper documentation — informal or mixed personal/corporate records can lead to reassessment
• Vehicle expense claims must match mileage logs and business use
• Shareholder loans cannot be used as personal bank accounts
• GST/QST must be applied correctly under the corporation
• Incorporation does not shield owner-operators from fines or professional negligence

Judges emphasize proper bookkeeping, governance, and separation between personal and corporate finances.

Why CRA and Revenu Québec Target Owner-Operators

Truck drivers face audits more frequently because:
• Fuel and repair claims are high
• Mileage logs may be incomplete
• Drivers mix personal and corporate expenses
• Carrier payments may not match reported income
• GST/QST filings often contain errors
• Incorporated drivers sometimes pay personal expenses from the company
• Cross-border income must be reported correctly with U.S. earnings

Auditors compare dispatch summaries, ELD logs, invoices, fuel receipts, and corporate statements.

Mackisen Strategy

At Mackisen CPA Montreal, we help owner-operators determine whether incorporation provides real financial benefits. We:
• Analyze income levels to determine tax savings
• Set up trucking corporations and register GST/QST
• Prepare salary/dividend strategies
• Track fuel, repairs, and operating costs accurately
• Build CCA schedules for trucks and equipment
• Reconcile U.S. and Canadian income
• maintain audit-proof bookkeeping and minute books
• File year-end corporate and personal returns

Real Client Experience

A Quebec owner-operator incorporated but mixed personal grocery purchases with corporate expenses. CRA reassessed shareholder benefits. We corrected the accounting, fixed shareholder loan balances, and implemented proper corporate controls. Another driver saved thousands in taxes by incorporating during a high-income year; we optimized compensation and CCA for his new truck.

Common Questions

When should an owner-operator incorporate?

Typically when net income exceeds $90,000–$120,000 or when long-term growth and tax deferral become important.

Does incorporation reduce taxes?

Yes. Corporate rates are significantly lower than personal rates, allowing for tax deferral.

Can incorporated truckers deduct more expenses?

Deductions are similar, but planning opportunities are better under a corporation.

Is liability protection improved?

Yes. Corporations help separate business obligations from personal assets.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps owner-operator truck drivers choose the best structure and maintain fully compliant tax records. Whether you continue as a sole proprietor or form a corporation, our expert team ensures precision, transparency, and audit protection.