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Small business tax filing runs on two clocks, and mixing them up is how owners end up paying interest. If you run the business yourself as a sole proprietor, your return is due June 15 but any tax you owe is due April 30. A corporation files its T2 return within six months of its year end and usually pays sooner than that.
Which return do you file, and when?
The answer turns on how the business is set up, and size has nothing to do with it. A sole proprietor reports business income on the personal return, using form T2125 for the business part. A corporation is a separate taxpayer with its own return. Ask yourself one thing first: are you taxed personally or through a company?
| Business type | Return | Filing deadline | Payment deadline |
|---|---|---|---|
| Sole proprietor | T1 with form T2125 | June 15 (December year end) | April 30 |
| Corporation | T2 | 6 months after year end | 2 months after year end, 3 for some CCPCs |
The 2026 dates in that table apply to the 2025 tax year. For the next one, check the CRA’s dates page before you plan around it, because the 2027 dates weren’t printed yet when I wrote this. Weekends and holidays can also shift a deadline.
What does a sole proprietor pay on $80,000?
Say your business nets $80,000 in Ontario. The self-employed tax calculator shows $13,233.57 of federal and Ontario income tax, plus $8,892.90 of CPP, because you pay both halves. That’s $22,126.47, or 27.7% of the profit, and you keep $57,873.53.
Now drop the profit to $70,000 by claiming another $10,000 of real expenses. The total falls to $18,298.32. The extra expenses saved $3,828.15. That’s why receipts matter.
The tool leaves out EI, GST/HST and the expenses themselves, so it starts from profit after costs, which means you still need decent books before the number means anything. Treat it as a rough guide.
How much should you set aside each month?
Nobody takes tax off your paycheque when you work for yourself, so the whole bill lands at once. On the $80,000 example, $22,126.47 a year works out to about $1,844 a month. Park that in a separate savings account the day a client pays you, and April 30 stops being a shock. Sam, a freelance electrician in Hamilton, moves a fixed slice over before the rent comes out, every single time.
If your profit is lumpy, use a percentage instead of a dollar amount. The 27.7% from the example is a fair ballpark, though yours will shift with your expenses and province.
How does small business tax filing change once you incorporate?
You now file the T2, and the company pays tax on its profit. For a Canadian-controlled private corporation (CCPC) the federal small business rate is 9% on the first $500,000 of active business income. Ontario’s small business rate was cut on 1 July 2026, so a calendar 2026 year gets a blended rate, and 2027 should be lower. That blend is our estimate, not a published figure.
The corporate tax calculator gives $35,088 on $300,000 of Ontario profit, which is 11.7%. Above $500,000 the combined rate in the tool is 26.5%. It ignores taxable capital, passive income and associated companies that share the limit. A group of related companies can pay more than the figure shown, and a company with a lot of investment income can lose part of the low rate.
Pulling money out for yourself is taxed again. That part isn’t in the corporate figure, and the dividend tax calculator covers it.
What else has a date attached?
Filing isn’t the only deadline. If you owe a fair amount each year, the CRA expects instalments through the year. The tax instalments calculator splits a bill into four payments, for example four of $2,000 on $8,000 owing. If you have staff, you also remit CPP, EI and tax withheld, and the payroll remittance calculator gives the amounts per pay period.
GST/HST has its own filing schedule once you’re registered. We couldn’t confirm the registration threshold from a CRA page, so read that page before you decide you don’t need to register.
What happens if you file on time but pay late?
You owe interest on the unpaid balance from May 1, and it keeps building until you pay. Filing by June 15 doesn’t stop that clock, which is why the two dates in the first table matter more than either one alone. If cash is tight, file anyway and pay what you can.
What records do you need to keep?
Invoices, receipts, bank statements and anything that backs up a claim. The CRA page on keeping records explains where to keep them and for how long. Six years from the end of the last tax year they cover is the usual rule, so a shoebox in the basement is fine as long as it’s labelled.
Where do owners slip up?
- Waiting until June 15 to pay. The filing date moved, the payment date didn’t, so interest starts in May.
- Mixing personal and business spending in one account, then not being able to prove a deduction.
- Treating the corporation’s tax as the whole bill and forgetting the tax on what you take out.
- Filing late with a balance owing, which adds a penalty on top of interest.
- Assuming a December year end. A corporation can choose another one, and its dates move with it.
Where the numbers come from
Deadlines come from Canada Revenue Agency pages on 2026 business tax deadlines and on when to file a corporation return, read in September 2026. The federal small business rate and $500,000 limit come from the CRA’s corporation tax rates page and the T2 guide, and provincial rates from CRA provincial pages. Personal figures use 2026 federal and Ontario schedules. No government body has reviewed or endorsed what you read here.
Frequently asked questions
When is small business tax filing due for a sole proprietor?
The return is due June 15 if you or your spouse is self-employed. Any tax owing is still due April 30.
When does a corporation file its tax return?
The T2 is due six months after the tax year ends. The balance is generally due two months after year end, or three for eligible CCPCs.
What form reports self-employed income?
Business income goes on form T2125, which attaches to your personal T1 return.
How much tax is that on $80,000 of profit in Ontario?
The calculator shows $13,233.57 of income tax and $8,892.90 of CPP, $22,126.47 in all.
What's the federal small business rate for a corporation?
It's 9% on the first $500,000 of active business income for a CCPC, before the provincial rate is added.
- 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