Canada (CA)
Canada is the world's second-largest country by land area and one of the most immigration-friendly nations on earth.
Capital: Ottawa
Region: Americas
Language: English
Currency: CAD (CA$)
Cost of living: Expensive (index 72)
Emergency: 911
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Business Setup
Start a business or go freelance in Canada.
🧑💻 Freelancer / Self-Employed Guide
Steps to register:
- 1 1. Determine your structure: sole proprietor (simplest, unincorporated) or corporation (more tax flexibility, more admin). Most freelancers start as sole proprietors and incorporate when annual revenue exceeds $80,000–120,000.
- 2 2. Register a business name if not operating under your legal name. Register with your provincial registry (e.g., ServiceOntario, BC Registry, REQ in Quebec). Cost: $60–100.
- 3 3. Get a Business Number (BN) from the CRA: register at canada.ca/business-registration-online. The BN is your federal tax identifier — needed for GST/HST, payroll, and corporate tax accounts.
- 4 4. Register for GST/HST if your annual revenue from taxable goods/services exceeds $30,000 in any single calendar quarter or in four consecutive quarters. Registration is mandatory above $30,000; voluntary registration below is possible and can be advantageous.
- 5 5. Open a separate business bank account — use your BN and business registration to open it. Keep all business transactions entirely separate from personal finances.
- 6 6. Set up bookkeeping: use Wave (free), FreshBooks, QuickBooks, or Xero to track income and expenses. Keep all receipts (digital is acceptable). Canada Revenue Agency (CRA) can audit up to 6 years back.
- 7 7. File annual income tax: sole proprietors report business income on Form T2125 (Statement of Business or Professional Activities), filed with your personal T1 return. Deadline: June 15 for self-employed, but TAX OWED is due April 30.
- 8 8. Pay quarterly income tax instalments: CRA requires instalments if your net tax owing is over $3,000 (over $1,800 in Quebec). Instalment schedule: March 15, June 15, September 15, December 15.
- 9 9. Remit GST/HST: quarterly or annually (annual if revenue under $1.5M). File via My Business Account at canada.ca or NETFILE.
- 10 10. Consider RRSP contributions: as a self-employed person, RRSP is your primary retirement vehicle (no employer pension). Contribute 18% of prior year's earned income up to $33,810 (2026 limit).
Tax registration
Register for a CRA Business Number (BN) at canada.ca/business-registration-online. The BN is a 9-digit number used for all CRA accounts. When you register for GST/HST, you receive an RT account (e.g., 123456789 RT 0001). If incorporated, register for a separate corporate income tax account (RC). Use My Business Account at canada.ca to manage all CRA accounts online.
VAT threshold
$30,000 CAD in annual taxable revenue triggers mandatory GST/HST registration. Below $30,000 you are a "small supplier" and can choose not to register — which means you do not charge GST/HST to clients but also cannot claim Input Tax Credits (ITCs) on business expenses. Most freelancers register voluntarily once they have significant business expenses. The federal GST rate is 5%; provinces with HST (Ontario: 13%, Nova Scotia: 15%, etc.) remit combined to CRA. Quebec uses QST (9.975%) separately managed by Revenu Québec.
Invoicing
GST/HST registrants must include on all invoices: your GST/HST registration number (RT number), the date of the invoice, a description of the supply, the amount of GST/HST charged (or a statement that GST/HST is included and the rate), and the total amount payable. Non-registrants (under $30,000) must NOT charge GST/HST. Include your full legal name (or registered business name), client name, unique invoice number, date, itemised services or goods, and your bank details or payment instructions.
Social security
Self-employed Canadians pay both the employee and employer share of CPP contributions — 11.9% of net business income between $3,500 and $74,600 (YMPE 2026), up to approximately $8,461/year. This is a significant cost to plan for. There is NO mandatory employment insurance (EI) for the self-employed — you cannot receive regular EI benefits if your business slows down, unless you voluntarily opted into the Self-Employed EI program at least 12 months before claiming. Health insurance is not automatic — join a provincial plan (all provinces cover self-employed residents after the waiting period) but consider supplemental group benefits through professional associations (e.g., CPA Canada) for dental, vision, and paramedical.
💡 There is no "Freiberufler vs Gewerbetreibender" distinction in Canada. All self-employed income is business income, reported on T2125. The Small Business Deduction (SBD) allows incorporated Canadian-controlled private corporations (CCPCs) to pay 9% federal tax (vs 15% general corporate rate) on the first $500,000 of active business income — this is the primary tax incentive for incorporation. Provincial corporate rates also apply on top. Consult a CPA for advice on the optimal timing for incorporation.
🏢 Business Structures
Sole Proprietorship · Sole Proprietorship (Unincorporated)
Sole Trader / Self-Employed
None
Min. capital
1–3 days
Setup time
Liability: Unlimited personal liability — business debts are personal debts
Setup cost: $60–80 for business name registration (varies by province); free if operating under your legal name
Best for: Freelancers, consultants, contractors, artists, first-time entrepreneurs testing a business concept.
General Partnership · General Partnership (GP)
General Partnership
None
Min. capital
1–2 weeks
Setup time
Liability: Unlimited joint and several personal liability for all partners
Setup cost: $100–300 for registration and partnership agreement drafting
Best for: Small professional practices and early-stage ventures between two or more people. A written partnership agreement is strongly recommended.
Limited Partnership · Limited Partnership (LP)
Limited Partnership
None
Min. capital
1–2 weeks
Setup time
Liability: General partner: unlimited liability. Limited partners: liability capped at their investment.
Setup cost: $300–600 for provincial LP registration
Best for: Investment vehicles, real estate holdings, and ventures where passive investors want liability protection. At least one general partner must have unlimited liability.
Corporation · Federal or Provincial Corporation (Inc. / Ltd. / Corp.)
Limited Liability Company / Corporation
None federally (no minimum share capital)
Min. capital
1–5 business days (federal online); 2–4 weeks (some provinces)
Setup time
Liability: Limited to corporate assets — shareholders' personal assets are protected
Setup cost: $200–500 federal incorporation (Corporations Canada) or $300–800 provincial (varies by province)
Best for: Established businesses seeking liability protection, investment, tax planning (small business deduction), professional credibility, or planned growth. Most serious entrepreneurs incorporate within 1–3 years of starting.
Professional Corporation · Professional Corporation (PC)
Professional Corporation
None
Min. capital
4–8 weeks (requires approval from the relevant regulated professional body)
Setup time
Liability: Limited for business liabilities; professional negligence liability remains personal under provincial professional statutes
Setup cost: $500–1,500 (professional body approval + provincial registration)
Best for: Regulated professionals only: physicians, dentists, lawyers, accountants (CPAs), engineers, architects. Allows income splitting, tax deferral, and retirement savings strategies. Must comply with the provincial professional association's rules on PC ownership.
Business Setup
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