CRA: My Business Account
Primary portal for installments, GST/HST returns, correspondence, payroll remittances. Register immediately after getting a Business Number.
CRA: My Business Account →Stage · Self-employed money in Canada
Ongoing: discipline, installments, deductions
The boring stage and the one that determines whether self-employment is profitable or a slow financial bleed. Set aside 25–35% of every payment received for taxes and CPP; reconcile monthly; file quarterly installments if required.
What to do this week
- Set up automatic transfers: every time a client payment lands, transfer 25-35% to a separate tax-reserve savings account. Treat that money as CRA's, not yours.
- Calendar the installment dates: March 15, June 15, September 15, December 15. Installments are mandatory once net tax owing exceeds $3,000 in the current and one prior year.
- Reconcile books monthly, not quarterly, not at year-end. A 30-minute monthly session prevents an all-day year-end panic.
- Track deductible expenses systematically: home office (workspace percentage), vehicle (logbook of business km), meals (50% with clients), supplies, software, professional development, insurance, accounting fees.
- File GST/HST returns on the schedule CRA assigned (annual, quarterly, or monthly). Due dates and amounts owed are separate from income tax.
What to avoid
- Spending the GST/HST you collect. That money belongs to CRA. Collect it, keep it separate, remit on time.
- Claiming 100% of a mixed-use expense (phone, internet, car). Use a reasonable percentage and keep records. Round numbers ('exactly 50%') raise flags.
- Using 'simplified method' for home office when 'detailed method' would help you more. Simplified is a flat $2/day up to $500. Detailed uses actual expenses × workspace percentage and often yields larger deductions for full-time self-employed.
- Ignoring CPP contributions. Self-employed pay BOTH employer and employee CPP. ~11.9% combined in 2026 on earnings up to the yearly maximum pensionable earnings. This shows up on your tax return; budget for it.
Calculators for this stage
Forms to file at this stage
CRA: T2125 Statement of Business Activities
Required schedule attached to your personal T1 return. Reports business income, expenses, and net income. Separate T2125 for each business.
CRA: T2125 →CRA: GST/HST return
Filed on CRA My Business Account. Schedule (annual/quarterly/monthly) assigned on registration; annual is default for small businesses.
CRA: GST/HST →Frequently asked
How much of my income should I set aside for taxes?
A working rule for full-time self-employed Canadians: 25% at low incomes, 30% at middle, 35%+ at high. Actual rate depends on province and total income. Running your own estimate via a tax reserve calculator quarterly is more accurate than the rule of thumb.
Do I have to pay CPP if I'm self-employed?
Yes. Self-employed Canadians with net business income above ~$3,500/year must contribute to CPP. You pay both the employee and employer halves, combined rate approximately 11.9% in 2026, up to the yearly maximum pensionable earnings. Contributions are paid with your tax return, not in payroll withholdings.
When are quarterly installments required?
CRA requires installments when net tax owing (not revenue, actual tax) exceeds $3,000 in the current year AND one of the two prior years. For Quebec residents with Quebec tax, the threshold is $1,800. Missing installments triggers interest charges, not just an April balance.
What's the difference between simplified and detailed home office deduction?
Simplified: $2 per day worked from home, up to $500/year. No receipts needed. Detailed: workspace-percentage (workspace sq ft / total home sq ft) applied to utilities, rent, property taxes (if owner: NOT mortgage principal; interest optional), maintenance, insurance. Detailed usually yields larger deductions for full-time self-employed.
Next stage
Growth: incorporation, hiring, scaling →