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  • Writer's pictureNassima Choualhi

Sole proprietor - Tax return Guide

Updated: Sep 26, 2022

Self-employed, or sole proprietor, must declare their business income and expenses on their personal tax return. They are taxed on personal tax rate and not the corporate tax rate. Their tax will depend on the total income earned during the year, including employment income, investment income, property income, as well as the credits to which he is entitled according to his situation.

What to prepare for your tax return?

Because of the small number of transactions, a simple Excel file can be enough to compile your company's total income and expenses for your accountant. You can also use low-cost software, like Quickbooks, if you prefer to organize your accounting that way or have a lot of transaction. The important thing is to clearly compile your sales and expenses for the year, and don't forget anything! It is mandatory to declare all your business income earned during the year. On the other hand, it is important to maximize your eligible expenses to reduce your tax because the government will not come to you if you have forgotten to report expenses. However, it is possible to amend a past tax return if this is the case.

What expenses are eligible?

Eligible expenses are those incurred in the year and related to your business activities. You cannot pass expenses from previous years or a personal expense.

Here are some examples:

  • Office supplies

  • Cost of goods sold (raw materials, labour, transportation, etc.)

  • Business taxes and permits;

  • Premium paid for professional liability insurance to maintain professional status;

  • Cost of hired labour and materials used in the maintenance and repair of property used to earn business income;

  • Meals and entertainment expenses;

  • Motor vehicle expenses (travel expenses, interest on a loan to purchase a vehicle, depreciation, lease fees, etc.);

  • Major asset categories and their depreciation rates;

  • Home use expenses.


If you are a member of a partnership, you must report your % share of income and expenses on your personal return.

To learn more, visit our instagram page to view our IGTV on this topic. You can also contact us by scheduling a consultation with one of our Chartered Professional Accountants (CPA).

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