Step 9 of 13
Set up bookkeeping and income tax
Track sales, GST, PST and expenses from day one.
- Time
- 2–3 hours
- Cost
- Software from about $0–$30/month; accountant consult about $150–$300
Bookkeeping
Use simple software such as Wave, QuickBooks or Xero. Track sales, GST collected, PST collected and expenses separately. Keep every receipt.
Income tax
As a sole proprietor you report business income on your personal tax return using form T2125.
You may need to pay income tax in instalments once you owe more than a few thousand dollars a year. Your accountant can tell you.
Records
Keep your records for six years.
One accountant meeting
A one-time consult early on is cheap compared with fixing mistakes later. Bring this checklist and ask about out-of-province sales.