Who We Help · Window & Door Companies · Incorporation
Incorporating a window and door business: liability, deposits, and the dealer agreements
Window and door companies should incorporate earlier than most small businesses, because the two things that can sink an owner — a water-infiltration claim years after an install, and a stack of customer deposits owed if the business stumbles — both land on you personally as a sole proprietor. The corporation puts a wall between them and your house. Done properly, it also moves your manufacturer dealer agreement and your consumer-lender merchant account into the new entity, sets up HST, WSIB and T5018 reporting from day one, and leaves room for family shareholders and an eventual sale.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
Why installers incorporate before retailers do
A retailer sells a product and the manufacturer's warranty travels with it. An installer alters the building envelope. When a rotted sill or a mould problem shows up three winters later, the homeowner's insurer looks for the installer, and Ontario's limitation periods run from discovery, not from the install date. Add the consumer-protection exposure of deposits held on in-home contracts and a fleet of vans on the road every day, and the case for a corporation is about liability before it is about tax. Insurance still comes first — commercial general liability with a completed-operations limit sized to your install history — but the corporation is what keeps a claim beyond the policy from reaching personal assets.
The tax case follows once profits exceed what you need to live on. Ontario's combined small business rate on the first $500,000 of active business income is 12.2% as at the time of writing, against personal rates that top out at more than four times that. In a business that has to fund product purchases weeks ahead of install revenue, retaining earnings at the low rate is how the next season's working capital gets built without a line of credit. Our note on whether to incorporate in Ontario runs the general numbers.
What has to move, and what has to be set up fresh
Incorporating a dealer is mostly a re-papering exercise. The corporation is a new legal person, and every relationship that matters to your revenue was signed by the old one.
| Item | What to do | Why it matters |
|---|---|---|
| Manufacturer dealer agreement | Assign or re-sign in the corporation's name; confirm rebate tier history carries over | Rebate tiers and territory rights are contractual, and some programmes reset on a new account |
| Consumer-lender merchant account | Apply as the corporation; expect a personal guarantee at first | Lenders fund the legal entity on the agreement; funding to the wrong name stalls jobs |
| Open customer contracts and deposits | Complete them in the proprietorship or novate them; start new sales in the corporation | Deposits are the customer's money until install; the handover must be clean |
| HST registration | New business number and HST account; file the section 167 election on the asset transfer | Dealers pass the $30,000 threshold almost immediately; the election keeps HST off the transfer itself |
| WSIB | New account, and clearance certificates gathered from subs under the new number | Construction coverage is mandatory and follows the employer entity |
| Vans, tools, inventory, goodwill | Roll in under section 85 at elected amounts | Avoids triggering tax on appreciated assets and sets the corporation's cost base |
| Payroll and T5018 | New payroll account; issue ROEs from the proprietorship if staff transfer mid-year | Slips and remittances must match the employer of record |
The section 85 rollover is what lets a working proprietorship move its vans, tool inventory, showroom fit-out and goodwill into the corporation without a tax bill on the way in; our note on how a section 85 rollover works covers the election. For a dealer starting fresh the sequence is simpler: incorporate, register for HST, WSIB and payroll, then sign the dealer and lender agreements in the corporate name from the start.
Family shareholders and the excluded-shares route
The tax on split income rules stop most owners from paying dividends to a spouse or adult child who does not work in the business. Two exits matter here. A spouse or child who actually works in the business an average of twenty hours a week — running the showroom, scheduling installs, handling service calls — earns the excluded business exception. And because a window and door company sells product as well as installation, it is often not a business that earns 90% or more of its income from services, which opens the excluded shares exception for family members aged 25 or older who hold at least 10% of the votes and value. The share classes have to be issued with that in mind at incorporation, not bolted on later.
Set up now for the sale you may want later
Dealers get bought — by larger dealers, by manufacturer-backed groups, and by their own employees. The lifetime capital gains exemption, $1.25 million per shareholder as at the time of writing, is available on a share sale only if the corporation passes the active-asset tests at the time of sale and over the prior 24 months. Deposit cash sitting idle, an investment portfolio inside the operating company, or a warehouse held in the same entity as the operations can all push those tests offside. A holding company for surplus cash and real estate, set up once the operating company has a couple of profitable years behind it, keeps the operating company clean and creditor-remote at the same time.
The corporation also needs its own housekeeping: a minute book, an annual return filed through the Ontario Business Registry, and a fiscal year-end chosen around the install season rather than defaulting to December. If any of your product comes from US manufacturers, the importer-of-record and dealer-programme questions belong to the corporation from day one — our cross-border guide for dealers covers them — and our incorporation and compliance services page sets out what we handle and what a lawyer handles.
Common questions.
Should I incorporate before I hire my first install crew?
Usually yes. Installation liability and deposit exposure are personal in a proprietorship, and moving dealer agreements, WSIB and payroll later is more work than starting them in the corporation.
Does my manufacturer rebate history transfer to the new corporation?
Only if the dealer agreement is assigned or re-signed and the manufacturer agrees to carry the tier history. We raise it with your rep before the switch so the programme year is not reset.
Can my spouse hold shares and receive dividends?
If they work in the business roughly twenty hours a week, or hold at least 10% of votes and value in a company that is not mainly a service business, the TOSI exceptions can apply. The share structure has to be built for it at incorporation.
Related reading
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