Updated Checked by the Tax-Services.ca editorial team How we check
To file business taxes in Canada, you use one of two routes. A sole proprietor reports on the personal return with form T2125, and a corporation files its own T2 return. For the 2025 tax year the sole proprietor’s return was due June 15, 2026, but the tax itself was due April 30.
Which return does your business file?
It comes down to how the business is set up. If you work under your own name, or with partners and no corporation, the profit lands on your personal T1 return. If you incorporated, the company is a separate taxpayer and files a T2 every year, even in a year with nothing to pay. The CRA says all resident corporations must file, and the exceptions are narrow (Crown corporations, Hutterite colonies and registered charities).
Not sure which one you have? Do you remember receiving articles of incorporation? If not, you’re almost certainly a sole proprietor. Just starting out? Our starting a business page covers the first decisions, including which structure to pick.
When is the deadline to file business taxes?
These are the dates the CRA published for 2025 returns. It hasn’t posted the dates for 2026 returns yet, so treat anything you read about them as a guess until it does.
| Who | Return | File by | Pay by |
|---|---|---|---|
| Sole proprietor, 2025 | T1 with T2125 | June 15, 2026 | April 30, 2026 |
| Corporation | T2 | 6 months after year end | Generally 2 months after year end, 3 for a CCPC claiming the small business deduction |
| GST/HST, annual filer | GST/HST return | 3 months after year end | Not confirmed, check the CRA page |
The June 15 date trips people up. It only moves the paperwork. Interest on a balance still starts on May 1, so a late return isn’t the risk, a late payment is. Picture a freelance photographer who files on June 12, feeling well ahead, and then reads the interest line on the notice of assessment. If you expect to owe every year, the instalment calculator shows the four payment dates (March 15, June 15, September 15 and December 15 in 2026) and the amounts. The CRA’s due dates page confirms the April 30 and June 15 dates for individuals.
What does it cost you to file business taxes late?
For a corporation, the late penalty is 5% of the unpaid tax at the deadline, plus 1% for each full month the return is late, up to 12 months. Interest compounds daily on top. There’s a separate $1,000 penalty if a corporation that has to file electronically doesn’t. That rule covers tax years after 2023, with exceptions for insurance corporations, non-resident corporations, corporations reporting in a functional currency and tax-exempt ones.
For the personal return of a sole proprietor, the late-filing penalty works the way it does for anyone else: 5% of the balance plus 1% a month. Read the CRA’s late-filing page for the wording before you rely on a number.
What will the tax come to?
Take a sole proprietor in Ontario with $50,000 of net business income. The self-employed tax calculator shows $5,961.64 of income tax and $5,533.50 of CPP, because you pay both halves. That’s $11,495.14 in all, or 23.0% of the income. At $120,000 the total climbs to $34,774.46, or 29.0%. Those figures leave out GST/HST, EI and your expenses, so they suit a rough plan and not a cheque.
A corporation works differently. The federal small business rate is 9% on the first $500,000 of active business income for a Canadian-controlled private corporation, against 15% for the general rate. On $100,000 of taxable income in Alberta, the corporate tax calculator gives $11,000, which is 11.0%. Ontario comes out at 11.7%, but that figure is a blend of two provincial rates for 2026 that we derived ourselves, so it’s an estimate and not a published rate.
Money you pay yourself out of the company is taxed again in your hands. The corporate figure doesn’t include that.
Does your business also have to deal with GST/HST?
Often, yes. Once your taxable sales pass $30,000, you’re no longer a small supplier. The CRA’s guide for GST/HST registrants measures that over a single calendar quarter or the last four quarters in a row, and says you must register within 29 days of the sale that takes you over. From that sale onward you charge the tax, so don’t wait for the paperwork. The GST, HST and PST guide explains how the pieces fit.
Common mistakes and what to keep
The usual one is mixing personal and business money. Open a separate account early and the year-end job gets a lot smaller. The second is forgetting that CPP is on you as a sole proprietor, which is why the bill feels bigger than the same income on a pay stub. The take-home pay calculator lets you compare the two.
Keep records for at least six years from the end of the last tax year they relate to. That means daily income and expenses with dates, amounts and sources, backed by the original documents. The CRA’s records guide adds that they belong at your Canadian residence or place of business unless the CRA allows otherwise. Payroll is its own chore, and the payroll remittance calculator covers what you send in for staff.
Should you hire someone? A simple sole proprietorship is doable alone. A corporation with employees, GST/HST and shareholder pay is where most owners want a preparer. Our guide to choosing a tax specialist covers the questions to ask.
Sources, and how we checked them
Deadlines, penalties, the electronic filing rule and record keeping come from Canada Revenue Agency pages read on 2026-09-30. The corporate rates and the 2026 tax tables come from the data files behind our calculators. No level of government runs or endorses this site.
Frequently asked questions
Do I file business taxes if I made no profit?
A corporation still files a T2 every year, even with no tax payable. A sole proprietor reports the business on the personal return with form T2125.
What is the deadline for a sole proprietor?
For the 2025 tax year the return was due June 15, 2026 and any balance was due April 30, 2026. The CRA hasn't posted 2026 return dates yet.
When does a corporation file its T2?
Within six months of its tax year end. Payment is generally due two months after year end, or three for a CCPC claiming the small business deduction.
How long do I keep business records?
At least six years from the end of the last tax year they relate to.
Is the Ontario small business rate settled for 2026?
Our calculator uses a derived blend for a calendar 2026 year, not a published rate, so treat that figure as an estimate.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST