What is a Sole Propertist in Canada and Why is it Important?
A sole proprietorship is someone who owns an unincorporated business by themselves. They are responsible for paying all the taxes that come with running a business, as well as all the administrative and legal obligations.
The sole proprietorship is taxed on their net income, which includes their profit after expenses. Since they are self-employed and have no employees, they also have to pay both the employee and employer portions of CPP/QPP premiums and EI premiums.
Sole proprietorship can be registered federally or provincially. The registration process is fairly straightforward, but it does require some basic information about your company such as your name, address, date of incorporation, etc.
Taxes 101 for Sole Proprietorship in Alberta
In order to understand how taxes work as a sole proprietorship, you need to know the difference between a sole proprietorship and an incorporated business.
A sole proprietorship is a business that is owned by one person, who can be called the owner or the sole proprietorship. A sole proprietorship is not separate from its owner, and it does not have any legal existence apart from the owner. The profits of a sole proprietorship are taxed on the individual’s personal income tax return.
An incorporated business is one that has been registered with government authorities and given legal status as an entity separate from its owners. The profits of an incorporated business are taxed on corporate tax returns filed by the corporation itself or, in some cases, on personal tax returns filed by shareholders of closely held corporations
What are the Different Types of Taxes that Sole Proprietorship Have to Pay in Alberta Canada?
In Alberta, Canada, sole proprietorship have to pay different types of taxes. Income tax is one of the most common taxes that sole proprietors have to pay. However, there are other taxes that they may also be required to pay, such as GST and PST.
The type of taxation that a sole proprietorship pays is dependent on what they earn annually. For example, if you earn less than $500 in a year then you don’t need to worry about paying any taxes at all because your earnings are below the taxable threshold.
Which Taxes Do I Pay and When Do I Pay Them As A Sole Proprietorship in Alberta Canada?
Self-employed individuals are responsible for paying taxes on their net income.
The type of tax you pay and the frequency of payment depend on your business’s structure and your province or territory.
In Alberta, Canada, sole proprietorship are required to file a T1 Income Tax Return annually. This is done through the Canada Revenue Agency (CRA).
