Updated Checked by the Tax-Services.ca editorial team How we check
A small business budget starts with one number: what you expect to sell in a normal month, minus what has to leave your account even in a month with no sales. If the gap is thin, nothing else on the page matters yet. Build the plan in three layers (money in, money out, money you’re holding for somebody else) and you’ll see a shortfall weeks before it hits.
What goes into a small business budget?
Start with revenue, and be stingy. Take your slowest recent month, not your best one, and ask if you’d still cover the bills on it. That’s the test. If you’re new and have no history, write down the sales you can already name (signed jobs, repeat customers) and treat everything else as a bonus.
Then list costs in two piles. Fixed costs come due regardless: rent, insurance, software, loan payments, your own pay. Variable costs move with sales: materials, card fees, delivery, hourly help. The split matters because a slow month only shrinks the second pile.
The third layer is the one people forget. Sales tax you collect isn’t yours. Payroll deductions you withhold aren’t yours either. Income tax on profit is yours to pay later, not to spend now. Park all three in a separate account and they won’t look like spare cash. It’s the same trick as putting a toonie jar aside, only with bigger coins.
Which dates and limits should be in the plan?
Put the calendar into the budget as real line items. These are the ones we could confirm on official pages.
| Item | What to budget for |
|---|---|
| GST/HST small supplier threshold | $30,000 in taxable sales over four calendar quarters; above that you must register |
| Ontario HST | 13% on most sales |
| Personal tax instalments | Due 15 March, 15 June, 15 September and 15 December, if net tax owing passes $3,000 |
| Self-employed 2025 return | Filing by 15 June 2026, but any tax owing was due 30 April 2026 |
| Records | Keep for at least six years after the last tax year they relate to |
We couldn’t find 2026 return dates that the CRA has published yet, so the table uses the 2025 return. The same split applies every year: the tax is due earlier than the return. Check the CRA page for the current year before you plan around the dates.
A worked example with real numbers
Say you run a shop in Ontario and expect $12,000 in sales in a typical month before tax. HST at 13% adds $1,560 that you collect and pass on, so the customer pays $13,560 in total and only $12,000 is yours. That $1,560 belongs in the “held for others” account on the day it arrives. The GST/HST calculator does the split for any province.
Now the margin. If products cost you $60 and sell for $100, the profit margin calculator shows a 40% gross margin, or a 66.7% markup on cost. On $12,000 of sales at that margin you’d have about $4,800 to cover rent, pay and everything else. Rent of $2,500 and software of $400 leave $1,900. Is that enough for your own wage? If not, the price or the volume has to change, and you’ve found that out on paper.
The monthly budget calculator works well for the personal side, so you can see what you actually need to draw. Set your draw first, then check the business can pay it.
How much should you set aside for tax?
The answer changes with how you’re set up. A sole proprietor pays personal tax on profit, plus CPP on self-employment income. The self-employed tax calculator gives an estimate, though it leaves out EI and its deductions lower income tax but not CPP, so treat it as a floor. If you cross the $3,000 line, the tax instalments calculator shows what four equal payments look like.
An incorporated business pays corporate tax instead. For a Canadian-controlled private corporation, the federal small business rate is 9%. On $100,000 of Ontario profit our corporate tax calculator gives about $11,700 combined. That leans on a blended Ontario small business rate for a calendar 2026 year, which is our own derived figure and not a published one. A corporation that isn’t eligible for the small business rate pays about $26,500 on the same profit. If you have employees, the payroll remittance calculator covers what you hold back and send in.
What does a bare-bones budget look like?
One page, twelve columns, and no more than a dozen rows. Money in at the top (sales, split by what you sell). Then the fixed costs, then the variable ones. Below that, three rows for the money you hold for others: sales tax, payroll deductions and an income tax set-aside. The last row is what’s left, and it carries forward into the next month.
Take Aisha, who runs a two-chair salon in Saskatoon. She lists rent, insurance, her booth-rental income and product costs on a single sheet, and adds a tax line she moves to savings the day each client pays. Once a quarter she checks the sheet against her bank statements. Nothing fancy, and she hasn’t been surprised by a bill in two years.
How often should you revise the budget?
Review it monthly and rebuild it once a year. A monthly check shows you where real spending drifted from the plan. The yearly rebuild is the time to change prices, drop costs that don’t earn their keep and decide what your own pay should be.
Mistakes that break a budget
The first is budgeting on best-month sales. The second is spending the sales tax balance because the account looks full. The third is leaving out your own pay, which makes the business look profitable when you’re really working for free.
Another one: a contingency fund. Some guides say to hold exactly 10% of costs. We can’t point to an official rule for that, so pick a number you can live with, such as one month of fixed costs, and build it slowly.
Finally, don’t set a budget and forget it. Compare it to your bank statement once a month. It takes twenty minutes and the difference between plan and reality tells you which line is lying.
How we checked the figures
The GST/HST threshold comes from the Canada Revenue Agency‘s page on when to register. Record-keeping comes from the CRA’s business records page. Instalment rules and filing dates come from CRA pages for 2025 and 2026, and corporate rates from the CRA corporation tax rates page and its Ontario page, read in September 2026. Rates that change on 1 October 2026 should be checked again on that date.
Frequently asked questions
How much should a small business keep in reserve?
There's no official figure. A common approach is one month of fixed costs, built up slowly, and you can adjust it once you see how uneven your sales are.
Do I budget sales tax as income?
No. GST/HST you collect belongs to the government. Keep it in a separate account so it doesn't get spent.
When do I need to register for GST/HST?
When taxable sales pass $30,000 over four consecutive calendar quarters, according to the CRA. You can also register earlier if you choose.
Should I budget for income tax instalments?
If your net tax owing passes $3,000 and it did in earlier years too, you'll likely pay them on 15 March, 15 June, 15 September and 15 December.
How often should I review the budget?
Monthly. Compare it with your bank statement and fix the lines that were off.
- 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