Graham, had a meeting with my accountant today and asked that question. It ultimately depends on your preference but there are benefits to incorporation such as:
- Limited Liability (Not really applicable to affiliates)
- Lower Tax Rate - 18% on first $400,000 of revenue Approx.
- You can pay yourself up to $30,000 in dividends tax free meaning that your first $30,000 of income is exempt for income tax
Those are just a few of the main points that I picked up, the problem with a sole proprietership is that it is straight income and you have to pay income tax according to the regular schedule which goes up to 48%. Also, with either method you should always set a certain amount aside from your revenues whenever you receive them as a provision for taxes so you do not end up with back taxes and penalties. Hope that helps.
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