Updated Checked by the Tax-Services.ca editorial team How we check
Accounting records what happened to your money. Taxation decides what part of it you owe. If the books are kept properly, the tax return is mostly copying, and for a self-employed person in Ontario with $60,000 of net income, that return means roughly $7,879 of income tax plus $6,724 of CPP.
What’s the difference between taxation and accounting?
Accounting is the daily job: income in, expenses out, receipts filed, bank accounts matched. Taxation is the rule set applied to those numbers once a year (or once a quarter, if you collect GST/HST or pay instalments).
They overlap, but they don’t always agree. A bookkeeper might record a purchase the day you pay for it. The tax rules may treat the same purchase differently, spreading it across several years or capping how much you can claim. That gap is where most of the paid work in this field sits.
Think of it as two jobs with two different questions. The bookkeeper asks, “Is this number right?” The tax side asks, “What does the law say we do with it?” One person can do both, especially for a small business, but they’re still separate skills.
Which records do I have to keep?
The CRA’s guide to keeping records says to hold on to them for six years from the end of the last tax year they relate to, unless you have permission to destroy them sooner. By default they stay at your Canadian residence or place of business, unless the CRA has agreed to somewhere else. They also have to show enough detail for the CRA to work out what you owe and what you’re entitled to.
In practice that means invoices, receipts, bank statements, and a note of what each expense was for. A receipt with no purpose written on it is a weak claim. Photograph paper receipts the day you get them, because thermal paper fades, and a faded coffee-shop slip proves nothing at tax time.
What does tax cost on $60,000 of self-employed income?
Here’s a worked case. A sole proprietor in Ontario with $60,000 of net business income has taxable income of $56,073 after the CPP deduction. Federal tax is $5,155 and Ontario tax is $2,724, so income tax is $7,879. The self-employed CPP is $6,724, since you pay both the employee and employer share. That’s $14,603 before EI, which this estimate leaves out.
Notice how much the CPP matters. It’s almost as big as the income tax. Books that shave an honest $5,000 of expenses off your profit cut both figures, but only if the expenses are documented. Try your own profit in the calculator for the self-employed, and see how employees compare in the take-home pay calculator.
How do I choose an accountant or a bookkeeper?
We can’t tell you who’s best or what a fair fee is. Prices vary a lot by city and by job, and we haven’t confirmed any, so a figure here would be a guess. What you can do is ask good questions.
Start with what they’ll actually do: monthly bookkeeping, year-end statements, GST/HST returns, payroll, or only the tax return. Who does the work, and who answers when the CRA writes? How do they want your records delivered? What happens if they make a mistake? Get a written scope with a price, so you can compare two quotes on the same terms. If a firm can’t answer in a sentence or two, you’ve learned something.
If your business is small and simple, software and a once-a-year review may be enough. Once you have staff, sales tax, or a corporation, it usually isn’t. Priya, a freelance designer in Winnipeg, might manage fine with an app and a yearly check. A café with six employees and HST to remit is a different story.
Other tools worth having open
If you collect sales tax, the GST and HST calculator shows the amount on any price. If you have employees, the payroll remittance calculator estimates what you owe the CRA on top of wages. And a corporation can test its numbers in the corporate tax calculator.
What mistakes and limits should you know about?
Mixing personal and business money is the big one. It’s legal, but it makes every record harder to trust. A second bank account costs a few bucks a month and saves hours.
Filing late is another. For 2025, the self-employed deadline to file was 15 June 2026, but the tax was still due 30 April 2026. We haven’t confirmed the 2026 dates yet, so check the CRA’s dates page. Our estimates use basic credits only and skip most claims, so treat them as a range, not a filing.
How we checked the figures
Record-keeping rules come from the CRA‘s Keeping Records guide. Deadlines are from the CRA’s filing dates page for the 2025 return. Rates and the worked example come from 2026 federal and Ontario data run through the site’s calculator, with CPP figures from the CRA. This is an independent information site, with no link to the CRA or any accounting body.
Frequently asked questions
What's the difference between taxation and accounting?
Accounting records your income and spending. Taxation applies the tax rules to those records to find what you owe.
How long do I keep tax records?
Six years from the end of the last tax year they relate to, unless the CRA allows you to destroy them earlier.
Where should records be kept?
The CRA says at your Canadian home or place of business, unless it has given permission to keep them elsewhere.
Do I need an accountant if I'm self-employed?
Not always. Simple books and software can be enough, but staff, sales tax or a corporation usually make help worth having.
When is the self-employed filing deadline?
For the 2025 return it was 15 June 2026, with any tax still due 30 April 2026. We couldn't find the 2026 dates yet.
- 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