Checklists
What do I owe, what do I set aside, and should I incorporate?
Self-employment income is taxed like a salary plus both halves of CPP, with no tax withheld along the way. The habits that keep you out of trouble: set aside a fixed share of every payment, know your instalment dates, and keep GST/HST in its own account.
Worth knowing before you start
- Set aside 20% to 35% of revenue depending on your profit and province. The calculator gives your exact share.
- Quarterly instalments start the year after you owe more than $3,000 ($1,800 in Quebec). Miss them and the CRA charges interest.
- Register for GST/HST once revenue passes $30,000 in four quarters. You collect it for the CRA and can claim back the tax on your expenses.
- Incorporating defers tax on profit you leave in the company (about 12% instead of your personal rate) but costs $1,500 to $3,000 a year to maintain. It rarely pays below $100,000 of profit if you spend everything you earn.
The steps, in order
- 1 What do I owe and set aside?Tax and CPP on your revenue and expenses, instalment dates, and HST to remit.Open the Self-employed tax calculator →
- 2 What do I charge and remit?The right tax for each customer’s province, your return, and whether the quick method pays.Open the Sales tax calculator →
- 3 If I incorporate, how do I pay myself?Salary, dividends or a mix, for the cash you need, with what stays in the company.Open the Salary vs dividends calculator →
- 4 Is contracting worth it?The rate that matches a salary once benefits and unpaid weeks are counted.Open the Contract vs full-time calculator →