Your first year is mostly about keeping records as you go. The filing comes once, after the year ends.
What you file
- Your personal return with a T2125 for the business. Due June 15 of the next year for self-employed people, but any tax owing is due April 30. See CRA dates for sole proprietors.
- GST/HST returns, only if you registered. Until your taxable sales pass $30,000 in four quarters in a row, registering is your choice. See Do I need to register for GST/HST?.
Nothing else is due during the first year unless you have employees.
Surprise 1: CPP on your profit
An employee pays half of their CPP and their employer pays the other half. When you're self-employed, you pay both halves on your profit, with your return. On a profit of a few tens of thousands of dollars, that can be several thousand dollars on top of income tax.
That's why the Set aside number on Home includes CPP. See What to set aside, and why 25%.
Surprise 2: instalments, the year after
No tax is taken off what your customers pay you. If you owe more than $3,000 at tax time (after anything taken off a job's pay), CRA may ask you to pay the next year's tax in quarterly instalments, on top of the bill you just paid. In that year you pay last year's tax and part of this year's.
The first year usually has no instalments. Set money aside for both anyway. See Instalments.
Losses
Many first years end with a loss. A business loss reduces your other income for the year, such as a job. It needs to be a real business run to make a profit, with records to show it.
Start-up costs
Equipment you buy, like a computer, isn't all an expense in the first year: it goes through capital cost allowance (CCA) over several years. Small supplies are expenses. Costs from before you started selling can often count once the business has begun. Keep the receipts.
Make it easy
- Record each sale and expense in the month it happens, or import your bank statement monthly.
- Snap receipts as you go. See Snap a receipt.
- Watch your tax-ready score on Home: it tells you the one thing to do next.
This is general information to help you keep your own records. It is not tax or legal advice.
Based on: CRA: Small businesses and self-employed income and CRA: Required tax instalments for individuals
Last checked: 2026-10-25