Most "get rich in Canada" content is really American content with the currency symbol swapped. That is a problem, because the parts of building wealth from a business that actually decide whether you keep the money are almost entirely Canada-specific: which registry you file with, whether you crossed a sales tax threshold you did not know existed, how much of your profit disappears into Canada Pension Plan contributions before income tax is even calculated, and whether the province you live in requires a licence to do the thing you are already doing.
This guide covers that machinery. It is not a strategy for choosing a business. It is the operating manual for running one inside the Canadian system without handing back a third of your gains in penalties, interest and avoidable tax.
Every figure below is dated and sourced. Canada indexes most tax thresholds annually, so a number that was right in 2024 is simply wrong now. Where a figure changes on a schedule, the section says so and tells you where to check it yourself.
Statistics Canada counted roughly 2.7 million self-employed workers in March 2025, up 81,000 (3.0%) year over year, in a workforce of around 21.1 million employed people as of the May 2026 Labour Force Survey. That is a large group, and it is extraordinarily heterogeneous. It contains incorporated dentists, sole-trader house painters, ride-share drivers, farmers, consultants billing five hundred dollars an hour, and people whose Etsy shop cleared four hundred dollars last year. Pooling their income into a single "average self-employment income" produces a number that describes almost nobody.
This matters whenever you see an earnings claim. Business income distributions are not bell-shaped. They are heavily right-skewed: a small minority earn multiples of the median, and the mean is dragged upward by them. A platform reporting that its "average seller earns X" is usually reporting a mean across accounts that includes a long tail of near-zero earners and a handful of very large ones. The median is invariably far lower, and the median among people who are still active after two years is a different number again, because the platform's denominator quietly excludes everyone who quit.
Treat any specific income promise, including any you find on this site, as unverifiable unless it names a real person with a citable source. This guide contains none, deliberately.
And what it charges you for the privilege, which is the part people plan for badly. That is the rest of this guide.
A sole proprietorship is not a legal entity. It is you, trading. There is no separate taxpayer, no separate bank requirement in law, no filing beyond your personal return. Business income and losses land on form T2125 inside your T1 and are taxed at your personal marginal rate.
A corporation is a separate legal person. It files its own return (a T2), pays its own tax, and can hold profits that you have not yet paid out to yourself.
The three arguments people give for incorporating are limited liability, tax savings and credibility. Only one of them is usually decisive early on.
The rough rule of thumb used by Canadian practitioners is that incorporation starts paying for itself when you can consistently leave money in the company. Below that, the compliance cost dominates.
One easily-missed trap: a federal corporation carrying on business in Ontario must file an Initial Return under Ontario's Corporations Information Act within 60 days. There is no government fee, but missing it is a default.
The Business Number is a nine-digit identifier issued by the Canada Revenue Agency. It identifies your business to the federal government and, in several provinces, to provincial programs as well. Getting one is free.
The nine digits on their own do almost nothing. What matters are the program accounts appended to them, each a two-letter code plus a four-digit sequence:
So a GST/HST account looks like nine digits, then RT, then 0001. A common administrative error is writing the letters before the digits, which makes the number fail validation in the CRA's GST/HST registry lookup and can cause a customer's accounts payable department to reject your invoice.
You can obtain a Business Number and open program accounts through Business Registration Online, by phone on the CRA business enquiries line, or on paper using form RC1. Business Registration Online issues the number in the same session.
A corporation is normally assigned a Business Number and an RC account automatically when it is incorporated. A sole proprietor typically gets one only when a program account is first needed, which for most people means the day they register for GST/HST or hire their first employee.
This is the single most misunderstood number in Canadian small business, so here is the mechanism rather than the slogan.
The second test is where people get hurt. Imagine a consultant who has invoiced $22,000 in a quarter and then issues a single $15,000 invoice. That invoice takes the quarter to $37,000. The consultant was required to charge tax on it, was not registered, and did not. The CRA's position is that the tax was payable regardless. If the client will not pay a retroactive tax invoice months later, the consultant remits it out of their own pocket, and 13% of $15,000 in Ontario is $1,950 gone.
That is the whole trade-off. Business-to-business: register early. Business-to-consumer with thin margins: stay under, but watch the quarter test like a hawk.
What Crossing The Threshold Actually Changes
Registration is not a status. It is an ongoing obligation with deadlines attached.
You choose or are assigned a reporting period. Based on annual taxable supplies: $1.5 million or less gets an annual reporting period by default; more than $1.5 million and up to $6 million gets quarterly; more than $6 million gets monthly. You may elect to report more frequently than assigned, and many small registrants do, because filing quarterly keeps the cash flow visible and prevents the annual filer's classic mistake of spending the tax.
Annual filers with net tax of $3,000 or more in the previous fiscal year must pay quarterly GST/HST instalments during the current year, then reconcile on the annual return. This catches people out badly, because it means an annual filing frequency does not give you an annual payment schedule.
Filing deadlines follow the period. Monthly and quarterly filers file and pay one month after the period ends. Annual filers generally file three months after fiscal year end, and a self-employed individual with a 31 December year end who is an annual filer has a 15 June filing deadline for the GST/HST return.
The Quick Method is a simplification worth checking. If your worldwide taxable supplies including GST/HST are $400,000 or less over the last four consecutive quarters, you can elect to remit a flat percentage of your tax-inclusive revenue instead of tracking input tax credits on operating expenses. In Ontario at 13% HST, the remittance rate is 8.8% for a service business and 4.4% for a business that buys goods for resale. There is also a 1% credit on the first $30,000 of eligible supplies in each fiscal year.
For a service business with low input costs, this is usually money. A consultant billing $150,000 plus HST in Ontario collects $19,500 of HST, and remits roughly 8.8% of $169,500 rather than the full $19,500 less credits. The difference is taxable income, not free money, but it is a real margin.
The Quick Method is not available to several categories, and the exclusions catch exactly the people who would benefit most: persons providing legal, accounting or actuarial services in the course of a professional practice; persons providing bookkeeping, financial consulting, tax consulting or tax return preparation services; listed financial institutions; municipalities; public colleges, school authorities and universities; hospital authorities; charities; and qualifying non-profit organisations. If you are a bookkeeper or a financial consultant, you cannot use it.
Late filing is expensive in a specific way. The GST/HST failure-to-file penalty is calculated as A plus (B multiplied by C), where A is 1% of the amount owing, B is 25% of A, and C is the number of complete months the return is overdue up to a maximum of 12. Interest runs on top, compounded daily, at the prescribed rate. For the third quarter of 2026, the CRA's rate on overdue amounts is 7%.
Provincial Sales Tax Is A Separate Problem With Separate Rules
GST/HST is federal. In five provinces it is harmonised with the provincial tax and there is only one registration and one return. In four provinces there is a second, entirely separate sales tax, administered by the province, with its own registration threshold, its own rules about what is taxable, and its own return.
Combined rates as they stand in 2026:
- Alberta, Northwest Territories, Nunavut, Yukon: 5% GST only.
- British Columbia: 5% GST plus 7% PST.
- Saskatchewan: 5% GST plus 6% PST.
- Manitoba: 5% GST plus 7% RST (Retail Sales Tax).
- Quebec: 5% GST plus 9.975% QST, giving 14.975%.
- Ontario: 13% HST.
- Nova Scotia: 14% HST, reduced from 15% on 1 April 2025.
- New Brunswick, Newfoundland and Labrador, Prince Edward Island: 15% HST.
The registration thresholds do not line up with the federal $30,000, and this is where multi-province sellers get into trouble.
British Columbia has a small seller exemption, but it is a set of conditions rather than a single number. Under Bulletin PST 003 (revised July 2026), you are a small seller only if you meet all of the following: you are located in B.C. but do not maintain established business premises and do not regularly make retail sales from established commercial premises; you sell eligible goods, software or services at retail; you had $10,000 or less in gross revenue from all retail sales of eligible goods, software and services in the previous 12 months and estimate $10,000 or less in the next 12 months; you have not sold goods at wholesale in the previous 12 months; you do not sell vehicles, tobacco, vapour products, boats, aircraft, fossil fuel combustion systems, accommodation, liquor (with narrow exceptions) or cannabis; and you are not a lessor, an independent sales contractor, a real property contractor who supplies and affixes goods, or an online marketplace facilitator.
"Established commercial premises" is defined broadly and includes a storefront, a kiosk in a mall, a consignment store, and a stall or table at a bazaar, flea market or farmers market. Selling from such a location on four or more occasions in a 12-month period disqualifies you from small seller status even if your revenue is under $10,000.
Note also that being a small seller has a cost: you cannot claim the PST exemption for goods bought solely for resale. You pay PST on your inventory. Registering voluntarily buys that exemption back.
A significant B.C. change is landing now. Effective 1 October 2026, PST applies to accounting services, architectural services, engineering and geoscience services, non-residential real estate services, and security services provided in B.C. that relate to B.C. If you run any of those businesses in British Columbia, or sell those services into it, this is a registration and pricing question you need to have already answered.
Saskatchewan sets no minimum revenue threshold for out-of-province vendors. If you make a taxable sale to a Saskatchewan customer, the expectation is that you are registered and collecting from the first sale.
Manitoba raised its RST small-business threshold to $30,000, but the exemption is of limited use to out-of-province online sellers, who generally do not qualify unless they have paid Manitoba tax on resale inventory.
Quebec sets the QST registration threshold at $30,000, mirroring the federal figure. QST is administered by Revenu Québec, not the CRA, so Quebec businesses file two sales tax returns even though the thresholds match.
The practical consequence for anyone selling physical or digital goods across Canada: your federal registration obligation is one calculation, and you may have up to four additional provincial registration obligations with different triggers. Selling $35,000 nationally can leave you registered federally, in Quebec, in B.C., and in Saskatchewan, filing four separate returns on four separate schedules.
CPP: The Contribution Nobody Budgets For
This is the single biggest cash-flow shock for a newly self-employed Canadian, and it has nothing to do with income tax.
An employee pays half of their Canada Pension Plan contribution and the employer pays the other half. A self-employed person pays both halves. The rates for 2026:
- Year's Maximum Pensionable Earnings (YMPE): $74,600
- Basic exemption: $3,500
- Base contribution rate, self-employed: 11.90%
- Maximum base contribution, self-employed: $8,460.90
- Year's Additional Maximum Pensionable Earnings (YAMPE): $85,000
- CPP2 rate on earnings between YMPE and YAMPE, self-employed: 8.00%
- Maximum CPP2 contribution, self-employed: $832.00
- Total maximum CPP for a self-employed person in 2026: $9,292.90
In Quebec, the Quebec Pension Plan applies instead, at a higher rate. For 2026, the self-employed QPP rate is 12.6% on the base band with a maximum base contribution of $8,958.60, plus the same $832.00 QPP2 ceiling, for a total of $9,790.60.
Read those numbers again in the context of a first-year business. If you clear $75,000 of net self-employment income in Ontario in 2026, you owe roughly $8,461 in base CPP plus $32 of CPP2 before a single dollar of income tax. Federal income tax on that income is calculated separately, at 14% on the first $58,523 and 20.5% above that, plus provincial tax.
There is partial relief. A self-employed person deducts the "employer half" of the base contribution from income, and the enhanced portion of the contribution is also deductible. The remainder generates a non-refundable tax credit. But the deduction reduces taxable income; it does not reduce the contribution.
CPP is not a pure tax. It buys retirement pension entitlement, disability and survivor benefits. Whether that is a good deal for you depends on your age, your expected longevity and what else you would have done with the money. What is not defensible is failing to plan for it. Set aside cash for CPP separately from cash for income tax, from the first month.
EI For The Self-Employed: Optional, Narrow, And Usually Not Worth It
Self-employment income does not attract Employment Insurance premiums automatically. You may opt in, through a registration with the Canada Employment Insurance Commission, to access special benefits only: maternity, parental, sickness, compassionate care and family caregiver benefits. You cannot access regular EI benefits for loss of work, because you cannot make yourself redundant.
The 2026 numbers:
- Maximum insurable earnings: $68,900
- Employee premium rate (outside Quebec): 1.63%, giving a maximum annual premium of $1,123.07
- Quebec rate: 1.30%, giving a maximum of $895.70
- Minimum net self-employment earnings in the preceding year to qualify for special benefits: $9,254 for 2026
The opt-in is asymmetric in a way people miss. Once you have claimed benefits, you generally cannot opt back out for the rest of your self-employed career. You keep paying premiums indefinitely on a scheme you can only claim from in narrow circumstances.
For a self-employed person planning a pregnancy, opting in well in advance is a defensible calculation: parental benefits over a full leave substantially exceed a year or two of premiums. For most other people, self-insuring through savings and private disability insurance is cheaper and broader. Run the arithmetic against your own situation. Do not opt in as a reflex.
Quarterly Instalments: How The System Pulls Tax Forward
Employees have tax withheld each pay cheque. Self-employed people do not, so the CRA requires instalments once the annual balance gets large enough.
You must pay personal tax instalments for 2026 if your net tax owing is more than $3,000 for 2026 ($1,800 if you were resident in Quebec on 31 December) and it was also more than that threshold in either 2025 or 2024. Both conditions have to hold. A single unusually good year does not trigger instalments by itself; the second good year does.
Personal instalment due dates are 15 March, 15 June, 15 September and 15 December.
The CRA will send instalment reminders based on its own calculation. You have three options: pay what the reminder says (which protects you from interest even if you end up owing more), pay based on last year's actual net tax owing, or pay based on your own estimate of the current year. The third option is the one that generates interest charges when the estimate is too low. If your income is falling, using your own estimate is legitimate and saves cash flow. If it is rising, the no-calculation option in the reminder is the safe choice.
Instalment interest is charged at the prescribed rate on overdue amounts, 7% for the third quarter of 2026, compounded daily. There is also an instalment penalty where instalment interest exceeds $1,000, calculated as half of the excess over the greater of $1,000 and 25% of the interest that would have been payable had no instalments been made.
Filing deadlines for the self-employed are staggered in a way that creates a trap:
- The return is due 15 June for a self-employed individual and their spouse or common-law partner.
- The balance owing is due 30 April.
So you have a six-week extension to file and no extension to pay. Interest starts running from 1 May on any unpaid balance.
The late-filing penalty is 5% of the balance owing plus 1% for each full month the return is late, to a maximum of 12 months. If the CRA charged you a late-filing penalty in any of the three preceding years and issued a demand to file, the penalty rises to 10% plus 2% per month to a maximum of 20 months.
Corporations run on a different clock. A corporation must pay by instalments if its total taxes payable exceeded $3,000 in either the current or the previous tax year. Instalments are monthly by default, but an eligible small Canadian-controlled private corporation claiming the small business deduction can pay quarterly. A corporation does not have to make instalments in its first tax year. The T2 return is due six months after year end; the balance is due two months after year end, or three months for a CCPC claiming the small business deduction on income within the limit.
TFSA, RRSP And FHSA: What Business Income Does And Does Not Buy You
The registered accounts are the best part of the Canadian system, and business owners interact with them differently from employees.
TFSA. The 2026 annual dollar limit is $7,000, unchanged from 2025 and 2024. Someone who has been eligible since the TFSA launched in 2009 and has never contributed has cumulative room of $109,000 as of 1 January 2026. Withdrawals restore room, but only on 1 January of the following year, which is why re-contributing in the same calendar year as a withdrawal is the most common way people generate an over-contribution penalty of 1% per month on the excess.
The critical warning for business owners is that a TFSA is not immune to business income. Under subsection 146.2(6) of the Income Tax Act, a TFSA trust is taxable on income from carrying on a business. In Ahamed v. The King, 2023 TCC 17, the Tax Court held that a TFSA that had grown from about $15,000 to over $600,000 through frequent securities trading was carrying on a business, and that the profits were taxable as business income despite sitting inside the account. The Federal Court of Appeal dismissed the appeal in Canadian Western Trust Company v. Canada, 2024 FCA 108, confirming that the ordinary tests for whether securities trading constitutes a business apply inside a TFSA.
The practical implication: high-frequency trading, options writing and short holding periods inside a TFSA carry a real risk of the whole account being reassessed as a business, with gains taxed at 100% rather than as capital gains, and the tax assessed against the TFSA trust itself. Buy-and-hold index investing is not at risk. Day trading is.
You also cannot run an operating business through a TFSA. It is an investment account, not a trading vehicle for your consultancy.
RRSP. Contribution room is 18% of the previous year's earned income, capped at the annual dollar limit. The 2026 dollar limit is $33,810, up from $32,490 in 2025. To generate the full 2026 room you needed roughly $187,833 of earned income in 2025.
A note on sources: several sites still publish $32,490 as the 2026 limit. That is the 2025 figure. The CRA's own registered plans limits table and the major institutions give $33,810 for 2026. Check the CRA table rather than a blog before you file.
Here is where the sole proprietorship versus corporation decision bites again. Net self-employment income counts as earned income and generates RRSP room. Dividends do not. If you incorporate and pay yourself entirely in dividends, which is often marginally tax-efficient in the year, your RRSP room stops growing and, incidentally, so does your CPP entitlement, because dividends are not pensionable earnings either. Paying yourself a salary from the corporation costs you CPP contributions on both sides and payroll administration, but it builds RRSP room and CPP credits. There is no universally correct answer; there is a calculation, and it should be redone whenever your income changes materially.
FHSA. The First Home Savings Account remains at $8,000 of annual participation room and $40,000 lifetime for 2026. Unused annual room carries forward, but the carry-forward is capped at $8,000, so the most anyone can contribute in a single calendar year is $16,000. Contributions are deductible like an RRSP and qualifying withdrawals for a first home are tax-free like a TFSA, which makes it the most efficient account available to anyone who genuinely qualifies. Room only starts accruing in the year you open the account, so opening one costs nothing and starts the clock.
Personal tax context for 2026. Federal brackets, indexed by 2%-14% on the first $58,523; 20.5% to $117,045; 26% to $181,440; 29% to $258,482; 33% above that. The basic personal amount is up to $16,452, phased down for higher incomes. The lowest federal rate is 14% for the full year, having been 14.5% on a blended basis in 2025 after a mid-year change. Provincial rates stack on top.
Incorporation Economics: The Small Business Deduction And Its Traps
The federal small business deduction reduces the corporate rate to 9% on the first $500,000 of active business income earned by a Canadian-controlled private corporation. The federal business limit is ground down when taxable capital employed in Canada exceeds $10 million and is eliminated at $50 million.
Provinces layer their own small business rate on top. Combined rates in 2026 run from about 9% in Manitoba and Yukon to 12.2% in Ontario and Quebec before scheduled cuts land. Two of those cuts are happening right now:
- Ontario reduces its small business corporate income tax rate from 3.2% to 2.2% effective 1 July 2026, taking the combined rate to 11.2%.
- Quebec reduces its small business rate from 3.2% to 2.2% for taxation years beginning after 29 April 2026.
Provincial business limits are not uniform. Nova Scotia's is $700,000, and Prince Edward Island and Saskatchewan use $600,000, all above the federal $500,000. Sources disagree on whether Ontario also raised its business limit to $600,000 in the 2026 budget. Some commentary says it did; the TaxTips corporate rate tables show Ontario's limit remaining at $500,000. Confirm against the Ontario Ministry of Finance or your accountant before relying on it.
Three traps to understand before incorporating:
1. The passive income grind. If a CCPC and its associated corporations earn more than $50,000 of adjusted aggregate investment income in a year, the business limit is reduced by $5 for every $1 of investment income over the threshold. At $150,000 of passive income the small business deduction is gone entirely and all active business income is taxed at general corporate rates. This is aimed squarely at the "leave money in the company and invest it" strategy. It does not make that strategy wrong, but it caps how far you can push it before the arithmetic turns.
2. The personal services business rule. If the CRA concludes that, but for the corporation, you would reasonably be regarded as an employee of the entity paying you, your corporation is a personal services business. The consequences are severe: no small business deduction, no general rate reduction, an additional 5% federal tax taking the federal rate to 33%, and deductions restricted essentially to salary and wages paid to the incorporated employee plus a short list of specified items. Ordinary business expenses are disallowed. The CRA has run a dedicated PSB compliance pilot. If you incorporated to serve a single former employer, with their equipment, on their schedule, under their direction, you are in the risk zone.
3. Directors' personal liability for trust funds. Unremitted GST/HST and unremitted payroll source deductions can be assessed personally against directors. Limited liability does not extend to money you collected on the Crown's behalf.
Provincial And Municipal Licensing: The Variation That Catches People
There is no such thing as a Canadian business licence. There is a federal registry, thirteen provincial and territorial registries, dozens of sector regulators, and roughly 3,700 municipalities, many of which license businesses independently.
Registry-level variation is what the fee list above describes. But three further layers sit on top.
Occupational and title regulation, which varies sharply by province. The clearest live example is financial advice. Ontario's Financial Professionals Title Protection framework, administered by the Financial Services Regulatory Authority of Ontario, requires anyone using the Financial Planner or Financial Advisor title to hold an approved credential from a FSRA-approved credentialing body. The transition period for existing Financial Planner title users ended on 28 March 2026. New Brunswick's framework came into force on 1 January 2026, with transition periods for existing users. Saskatchewan has legislated in the same direction. Most other provinces have no title protection at all. The same job description is therefore a regulated activity in Ontario and unregulated in Alberta, which is exactly the kind of asymmetry that catches someone expanding across a provincial border.
Similar patterns apply to real estate agency, mortgage brokering, insurance, security services, construction contracting, electrical and gas work, and food handling, each with its own provincial regulator and its own registration cost and continuing education requirements. Assume regulation until you have confirmed otherwise, not the reverse.
Language regulation in Quebec. Under the Charter of the French Language as amended by Bill 96, since 1 June 2025, where a trademark or business name appears in a language other than French on public signs and posters visible from outside premises, French must be markedly predominant. There are detailed regulations about relative sizing. A business expanding into Quebec with English-only exterior signage and packaging has a compliance project, not a translation task.
Municipal licensing. Most Canadian cities license at least some categories of business, and a good number license home-based businesses specifically, with conditions on signage, customer visits, employees on site and proportion of floor area used. Fees are set by by-law and are published in city fee schedules rather than anywhere centralised. Vancouver, Calgary and Toronto all operate their own licensing regimes with different scopes and fee structures. Check your own municipality's licensing page before you trade, because a municipal licence is often the cheapest item on this whole list and the easiest to be prosecuted over.
There is one more variation worth naming: Alberta's model of delegating registry services to private agents means that the price you pay for an identical filing differs between providers within the same province. That is unusual in Canada and it is why Alberta cost quotes online vary so widely.
What A Realistic First Twenty-Four Months Looks Like
Not a promise of income. A compliance and cash-flow sequence.
Months 1 to 3.
- Decide sole proprietorship or corporation. If in doubt and you are not yet profitable, stay a sole proprietor. Converting later is straightforward; unwinding an unnecessary corporation is not.
- Register the business name if you are trading under anything other than your own legal name. $60 in Ontario, $70 in B.C. including name approval, $41.00 in Quebec for a natural person.
- Get a Business Number if you need a program account.
- Open a separate business bank account even as a sole proprietor. It is not a legal requirement but it is the difference between a two-hour year end and a two-week one.
- Decide on voluntary GST/HST registration. Business-to-business: register. Business-to-consumer: probably not yet.
- Check municipal licensing and any sector regulator.
Months 4 to 12.
- Track cumulative taxable revenue over rolling four-quarter windows and within each single quarter. Put a calendar reminder at the end of each calendar quarter to check both.
- Set aside cash in a separate account for CPP and income tax. A sole proprietor with no other income should budget conservatively; combined CPP plus federal plus provincial tax on the first $75,000 of net business income will typically run somewhere in the region of 25% to 30% of net income depending on province and credits. That percentage is an estimate for planning purposes only, not a calculation of your liability.
- Keep a mileage log if you use a vehicle. The CRA's 2026 reasonable allowance rates are 73 cents per kilometre for the first 5,000 business kilometres and 67 cents thereafter, with 77 and 71 cents in the territories. Those are the employer-allowance rates, but the log is what supports a self-employed vehicle claim.
- If you cross $30,000, register within the deadline and start charging immediately.
Months 13 to 24.
- File the T1 by 15 June, having paid any balance by 30 April.
- Check whether instalments are now required for the following year: net tax owing over $3,000 in two of the relevant years.
- If GST/HST-registered as an annual filer with net tax of $3,000 or more, start quarterly instalments.
- Revisit incorporation. The trigger is not a revenue number, it is whether you can leave profit in the company.
- Revisit registered accounts. Business income generates RRSP room with a one-year lag; the room from your first full year appears for the following year.
Who should skip this
Plainly:
- Anyone who needs money this quarter. Between registration, sales tax obligations and instalments, the Canadian small business system assumes you can carry costs before revenue. If your runway is measured in weeks, employment is the better instrument.
- Anyone incorporating to serve one client who used to be their employer. That is the personal services business fact pattern. The tax consequences are worse than staying an employee, and the CRA has a compliance programme pointed at it.
- Anyone planning to day-trade a TFSA to wealth. The Federal Court of Appeal has settled this. The account does not shelter business income, and the reassessment lands on the trust.
- Anyone who will not keep records. Almost every expensive outcome in this guide, from a missed quarter-test registration to a disallowed vehicle claim, is a records problem before it is a tax problem.
- Anyone in a regulated occupation who has not checked their province. Practising without a required licence is not a tax risk, it is a prosecution risk, and in several sectors it voids your insurance.
- Anyone whose plan depends on a specific income figure they read online. Including on this page. The distribution is skewed, the survivorship bias in published figures is severe, and no honest source can tell you what you will earn.
Mistakes That Cost Real Money
- Treating $30,000 as an annual figure. It is a rolling four-quarter test and a single-quarter test. The single-quarter test can catch you in month two.
- Not charging tax on the sale that crossed the threshold. That specific invoice is taxable. Retroactively collecting from a client is usually impossible.
- Assuming annual GST/HST filing means annual payment. Net tax of $3,000 or more last year means quarterly instalments this year.
- Forgetting the 30 April payment deadline because the 15 June filing deadline is later. Interest runs from 1 May at the prescribed rate, 7% for the third quarter of 2026, compounded daily.
- Paying yourself only dividends. No RRSP room, no CPP credits. Sometimes correct, never automatic.
- Ignoring provincial sales tax when selling across provinces. B.C., Saskatchewan, Manitoba and Quebec each have their own registration triggers, and Saskatchewan has no threshold for out-of-province sellers.
- Electing the Quick Method when you are in an excluded profession. Bookkeepers, accountants, lawyers, actuaries and financial or tax consultants cannot use it.
- Building a passive investment portfolio inside a CCPC without modelling the grind. Over $50,000 of adjusted aggregate investment income starts costing you the small business deduction at $5 of limit per $1 of income.
- Missing Ontario's free Initial Return. Sixty days after a federal corporation starts carrying on business in Ontario. No fee, real default.
- Letting a Quebec annual registration lapse. The Registraire's penalty is 5% of the unpaid balance plus 1% for each full month late, up to twelve months.
Where To Check The Numbers Yourself
Everything indexed changes annually and several items in this guide change quarterly. Before you act on any figure here:
- CPP, EI and RRSP limits are announced by the CRA in the autumn preceding the year. The registered plans limits table and the payroll deductions pages carry the authoritative figures.
- The prescribed interest rate changes every calendar quarter. The Q3 2026 rate on overdue amounts is 7%; the Q4 2026 rate is published in September 2026.
- The GST/HST small supplier threshold has been $30,000 for a long time and is not indexed, but the rate in your province can change, as Nova Scotia's did on 1 April 2025.
- Provincial small business rates and limits move with provincial budgets. Two changed in 2026 alone.
- Registry fees are set by regulation and change without much notice.
None of this is a substitute for advice from a Canadian accountant who has seen your actual numbers. The cost of an hour of that advice is trivially small next to the cost of the mistakes above. A reasonable estimate for a first consultation and a simple year-end for a small sole proprietorship in a Canadian city is somewhere in the $500 to $2,500 range, with incorporated year-ends materially higher; this is an estimate based on typical market pricing and not a sourced figure, so get quotes.