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Tickle & Compass
Business tip
The simplest way to run a business in Canada — and the one where you and the business are legally the same person.
The setup
Name
Operating under anything other than your own legal name usually means registering a trade name with your province. It's a small filing, not a corporation.
Paperwork
No separate business tax return and no annual corporate filing. Keep good records — your income and expenses go on your personal return.
How you're taxed
Net business income goes on your personal return (form T2125) and is taxed at personal rates, whether you withdraw the money or leave it in the business account.
The CPP surprise
Employees split Canada Pension Plan contributions with their employer. As a sole proprietor you're both, so you pay the employee and employer share yourself.
Deadlines
Filing
Self-employed filers have until June 15 to file — but any balance owing is still due April 30. Filing late-but-paying-late still earns interest.
Instalments
No one withholds tax for you. If you owed more than $3,000 in net tax this year and in either of the last two years, CRA expects quarterly instalments.
GST/HST
You're a small supplier while your taxable revenue is $30,000 or less in any single calendar quarter and over the last four quarters. Go over on either test and you must register and start charging GST/HST, starting with the sale that put you over. Below that you can register voluntarily, which lets you claim back the GST/HST you pay on business expenses.
The catch
Business debts and lawsuits can reach your personal assets — savings, car, even your home. Insurance can cover some of that risk; it doesn't remove it. It's the main reason people incorporate.
Tickle & Compass
Wondering whether it's time to incorporate? The next deck lays the two structures side by side.
Incorporate or not? →General information, not tax, legal, or financial advice. Rules vary by province and change — confirm with an accountant.
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