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As a sole proprietor you report business income on your own return. Register for GST/HST once taxable sales pass $30,000 over four quarters, expect to pay tax by instalments, and keep your records for six years.
If you start a business in Canada as a sole proprietor, you report its income and expenses on your own return and pay tax on the profit at personal rates, plus both halves of CPP. You must register for GST/HST once taxable sales pass $30,000 across four consecutive calendar quarters. Keep your records for six years.
What do I report as a sole proprietor?
As a sole proprietor you report business income and expenses on your own return, and the profit is taxed at your personal rates. You also pay both halves of CPP, the employee share and the employer share, because you’re both. Estimate it with the self-employed tax calculator, and see our expense checklist for the costs people forget. Starting small alongside a job? The side hustle tax calculator shows what a second income adds to your bill.
Say Priya in Winnipeg starts a bookkeeping side gig. Nobody sends her a pay stub, so her own invoices become the income line on her return. A self-employed return is due June 15, but any tax you owe is still due April 30.
When must I register for GST/HST?
You must register once your taxable sales pass $30,000 across four consecutive calendar quarters. Before that you’re a small supplier. You can still register earlier, and that lets you claim back the tax you pay on business costs. The catch is that you then have to charge the tax on what you sell. The sales tax guide explains how.
Do I have to pay tax during the year?
Likely, yes. Nobody takes tax off your income any more, so the CRA may ask you to pay in quarterly instalments. The instalments calculator shows the amounts, and the dates are on the tax calendar. A few bucks set aside from every invoice, kept in a separate account, makes the bill a lot less scary.
How long do I keep my records?
Keep every receipt, and hold them for six years. Records matter more than any trick. For deductions worth a look, the articles on self-employed tax deductions and the home office deduction are a good start, and the self-employed and small business guide pulls it all together.
What’s the most common mistake new owners make?
Mixing personal and business money. A separate bank account costs little and saves hours later. A sole proprietor isn’t required by the CRA to have one, and your records still come out much cleaner with it.
Where do I go for the rest?
Gather paperwork with the document checklist and follow the steps in the filing guide. If you sell in more than one province, the province index can point you to each one’s rules.
All of this is general information and none of it replaces advice about your own business. We run an information site: no returns prepared, no bookkeeping, and no voice for the CRA. A qualified preparer or the CRA can confirm the details for your situation, and if a CRA letter differs from this page, follow the letter.
Frequently asked questions
When must I register for GST/HST?
When your taxable sales pass $30,000 over four consecutive calendar quarters. You may register earlier if you want to claim input tax credits.
When is a self-employed tax return due?
June 15, but any tax you owe is still due April 30.
Do I need a separate bank account?
A sole proprietor isn't required by the CRA to have one, and your records still come out much cleaner with it.and your life easier at tax time.
How long do I keep my records?
Generally six years from the end of the tax year they relate to.
Do I pay CPP on my business income?
Yes. As a sole proprietor you pay both the employee and the employer share of CPP, because you are both. The self-employed tax calculator estimates it.