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Small business taxes depend on how you’re set up. A sole proprietor puts business profit on a personal return, and on $80,000 of net income in Ontario that means $22,126 of income tax and CPP. A corporation files its own return, and federal tax on the first $500,000 of active business income can be as low as 9% for a qualifying company. The CRA’s corporation tax rates page confirms the 9% net rate for Canadian-controlled private corporations that claim the small business deduction.
Which taxes does a small business pay?
Three families, and they don’t overlap much. Income tax comes first. Then payroll, if you have staff: income tax, CPP and EI held back from pay, plus your own matching share. Last is sales tax, which you collect from customers and pass on.
The GST/HST piece trips up new owners because it isn’t your money. Ontario’s HST is 13%, so a $100 sale becomes $113 at the till. The GST/HST calculator splits any total back into price and tax.
What’s the difference between a sole proprietor and a corporation?
A sole proprietor and the business are the same taxpayer. There’s one return, and you pay CPP on both the employee and employer halves. A corporation is a separate taxpayer. It pays its own tax, and you pay a second layer of tax when money comes out to you as salary or dividends.
That second layer is the catch. A low corporate rate only helps while profit stays inside the company. The dividend tax calculator shows what you pay personally once you take it out.
When are small business taxes due?
| Who | Filing | Payment |
|---|---|---|
| Self-employed person (2025 return) | June 15, 2026 | April 30, 2026 |
| Instalments, individuals | March 15, June 15, September 15, December 15 | |
| Corporation | Within six months of year end | Two months after year end, three for a qualifying small company |
| GST/HST, monthly or quarterly filer | One month after the reporting period ends | |
| GST/HST, annual filer | Three months after the fiscal year end | |
| T4 slips | Last day of February after the calendar year | |
Those dates are the ones the CRA printed for 2026. Deadlines for the 2026 tax year weren’t out when we checked, so confirm them before you plan around them. Note the trap for sole proprietors: you get until June 15 to file, but interest runs on any balance from April 30.
What does a small corporation pay on $300,000?
Take a Canadian-controlled private corporation in Ontario with $300,000 of active business income. The corporate tax calculator shows federal tax of $27,000, which is 9%. Ontario adds $8,088, so the total is $35,088, an average of 11.7%. That leaves $264,912 in the company.
Handle that provincial figure with care. Ontario lowered its small business rate on 1 July 2026, so the calculator blends the old and new rates for a calendar 2026 year. That blend is our own estimate by days and not a published rate. A company with a different year end will land somewhere else.
Compare the sole proprietor. On the same $80,000, income tax and CPP take 27.7% in the self-employed tax calculator. The two aren’t the same comparison, though. The corporation’s figure excludes the tax you pay when you pull money out.
What should a first-year owner do first?
Picture Lena, a plumber in Regina who went out on her own in January. She doesn’t need a corporation to start, and she doesn’t need to figure out every rule by March. She needs a handful of habits.
- Open a separate bank account so business money never mixes with groceries.
- Keep every receipt and invoice, and note what each one was for.
- Park a share of every payment for tax, because nobody deducts it for you. Pick a share you can live with, then adjust once you see a real estimate.
- Watch the $30,000 line for sales tax. If her taxable sales near it, she has 29 days to register once she crosses.
- Put the filing and instalment dates in her phone now.
Run your real numbers through the self-employed tax calculator once you’ve got a few months of income to plug in. If you’d rather be early than late, you’ll thank yourself at tax time.
Where small business owners slip up
- Skipping instalments. Once tax owing crosses $3,000, the instalments calculator splits the year into four equal payments. On $6,000 expected that’s $1,500 each.
- Treating HST collected as revenue. It sits in your account until you remit it.
- Assuming the low corporate rate applies to everyone. Large taxable capital, passive investment income and associated companies sharing one limit all raise the bill.
- Paying yourself with no plan. Salary, dividends and leaving profit in the company are three different tax outcomes.
- Ignoring the small supplier rule. Cross $30,000 of taxable revenue and you must register within 29 days.
The tools also leave things out. The self-employed calculator doesn’t include EI or business expenses, and the corporate one ignores the taxable capital reduction to the limit, though it has a box for passive income. If any of those apply, that’s a job for an accountant. Plenty of owners never need one in the first year, and plenty need one the moment they incorporate. The point of the numbers above is to show you which side you’re on before you spend a few bucks finding out.
The sources behind this page
Deadlines and the 9% federal rate come from Canada Revenue Agency pages, including its 2026 deadline summary and the T2 corporation guide, read in September 2026. The $30,000 small supplier limit is from the CRA’s GST/HST registration pages. Provincial rates come from the calculator’s 2026 data, which lists several items still to be checked. No level of government runs or endorses this site.
Frequently asked questions
What is the federal small business rate?
For a qualifying Canadian-controlled private corporation it nets to 9% on the first $500,000 of active business income. Provincial tax comes on top.
When do I file as a self-employed person?
The deadline for the 2025 return was June 15, 2026. Any balance owing was still due April 30, and interest ran from that date.
Does a sole proprietor pay CPP?
Yes, both halves. On $80,000 of net income in Ontario the calculator shows $8,892.90.
When must a business register for GST/HST?
Once taxable revenue passes $30,000 in one quarter or over four quarters in a row. You then have 29 days.
Do I need to pay tax instalments?
Often, when your net tax owing passes $3,000. The calculator uses that threshold and shows four payment dates.
- 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