Accounting for Plumbers: Is it Time to Incorporate?

One of the most common questions we hear from business owners is how much they should be setting aside for taxes. Many of our clients come to us feeling unsure, overwhelmed, or surprised by their tax bill because they were never taught how to plan for it throughout the year.

Once we walk them through a simple system, they feel more confident and more in control of their finances. You can use the same approach in your business. Here are a few simple ways to plan ahead for taxes.

1. Set aside a percentage of every payment you receive.

A common starting point is 15 to 30 percent ,depending on your income level and business structure. For example, if you bring in $8,000 in a month and save 20 percent, you would set aside $1,600 immediately. This helps you avoid scrambling for a large lump sum at the end of the year.

2. Review your financial reports each month so you always know how your income and expenses are trending.

This helps you adjust your savings if your income changes. For example, if your revenue usually sits around $5,000 but jumps to $12,000 during a busy season, increasing your tax savings for that high revenue month gives you a stronger buffer and keeps you prepared.

3. Create a separate bank account specifically for tax savings.

This helps prevent mixing your tax money with your operating expenses. Many clients have told us that before setting up a separate account, they kept accidentally spending what they intended to save for taxes. Once the tax funds were separated, it became much easier to stay disciplined and avoid surprises.

Setting money aside for taxes is not only about compliance. It is about building stability, predictability, and peace of mind as you grow your business.

If you would like support staying organized, keeping your books accurate, and preparing for tax season with confidence, we are here to help you. Reply to this email if you would like us to take the stress of your business finances off your plate.

Accounting for Plumbers - FAQs

If I incorporate, can I still pay myself easily or does all the money belong to the company?

Yes, you can absolutely pay yourself! While the money technically belongs to the company, you’re the owner, so you call the shots. You can pay yourself a regular salary (which makes you an employee of your own company), pay yourself dividends from the profits, or do a mix of both. Each option has different tax perks, and a good accountant can help you figure out the best strategy for you.

My spouse helps with the books and answering the phone. How does incorporation affect them and our family's finances?

Incorporation can be great for this. It opens up smart ways to do some income splitting. For instance, you could pay your spouse a reasonable salary for the work they actually do, which becomes a handy tax deduction for the business. You could also make them a shareholder, allowing them to receive dividends. The rules here are strict—the pay has to match the work—but it can be a fantastic way to improve your family’s overall tax picture.

Are there specific government grants from CanNor or territorial programs that are only available to incorporated businesses?

Yes, very often. Many of the bigger grants for business development and expansion are specifically designed for formal business structures. While some programs are open to sole proprietors, being incorporated makes you eligible for a much wider range of funding and frankly, makes your application look more solid and professional to the people handing out the money.

What's a realistic all-in cost to set up and maintain a corporation for a small business in the North for the first year?ere

It can vary a bit, but a good budget to have in mind for the first year is somewhere in the $1,500 to $3,500 range. That generally covers the legal and accounting fees to get registered and set up properly, plus the cost for your first corporate tax return. After the first year, the annual costs to keep everything filed and up-to-date are much lower.

I do a lot of work on First Nations' land. Does my business structure impact my ability to get contracts or form partnerships with Indigenous development corporations?

It certainly can. An incorporated business is often seen as more stable, permanent, and professional—a huge plus when you’re bidding for contracts with First Nations governments or looking to partner with their economic development corporations. A formal corporate structure gives you the legal foundation you need for joint ventures and other partnerships, which are incredibly common on major Northern projects.

What can I deduct as a self-employed plumber in BC?

Beyond standard tools and materials, many plumbers miss deductions like protective gear (steel-toed boots, safety glasses), specialized software for scheduling, union dues, and even a portion of your vehicle’s maintenance if it’s used for service calls. We help you track every “hidden” deduction to lower your year-end tax bill. To get a personalized list of deductions for your business, contact our Vancouver office today.

Should I incorporate my plumbing business or stay a sole proprietor?

This is a common question for growing trades. Generally, once your plumbing business is netting more than you need for personal living expenses, incorporating can offer significant tax deferral advantages and limited liability protection. We provide a full cost-benefit analysis to help you decide when to make the switch.

How do I manage GST/PST on plumbing materials and labor?

Navigating sales tax in BC can be tricky for trades. You must charge GST on your labor and materials, but you can also claim Input Tax Credits (ITCs) for the GST you pay on business purchases. We streamline your bookkeeping so your quarterly filings are accurate and painless.