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Ontario|Tax LawBusiness Taxes 183 Sole proprietorships A sole proprietorship is an unincorporated business that is owned by one person. Sole proprietorships are treated differently from other types of businesses for tax purposes.
- Taxable income
Income in the hands of a sole proprietor is treated the same as personal income, and is included on the sole proprietor's personal income tax return. However, a sole proprietor is required to keep separate personal records from the business records.
If you are a sole proprietor, you are required to pay personal income tax on net business income earned during the calendar year, even if you do not receive some of the revenue until the next calendar year.
- Fiscal period
You may be eligible to apply to use a fiscal period other than a calendar year for calculating and paying taxes, but you will not usually be able to defer taxes this way.
- GST and PST
As a sole proprietor you may also be required to collect and remit GST and PST. For more information refer to other sections of Legal Line , or contact a tax lawyer or an accountant.
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