Small business taxes in Ontario: what you actually owe
A plain-English map of the taxes an Ontario small business deals with — HST, income tax, payroll deductions and instalments — plus a rough calendar.
Nobody starts a business to become a tax administrator, and Ontario doesn’t make it obvious what you owe or when. Here’s the plain-English map of the taxes an owner-operated business actually runs into — what each one is, and roughly when it’s due.
The taxes you’ll actually meet
- HST. 13% in Ontario on most sales. You collect it, claim back the HST you paid on business purchases, and remit the difference. You register once you pass $30,000 in revenue over four quarters — details in how to file HST in Ontario and how to get an HST number.
- Income tax. A sole proprietor reports business income on their personal return; a corporation files its own T2. Either way, set money aside as you go so it isn’t a shock.
- Payroll source deductions. If you have staff, you withhold CPP, EI and income tax and remit it, usually monthly. Contractors are different — they invoice you.
- Instalments. Once your tax owing is large enough, the CRA expects quarterly instalments rather than one lump at year-end.
The theme: tax is collected all year, not just at year-end. The businesses that get surprised are the ones whose books only get touched in April.
Keeping these current is exactly what a set-up-for-you system is for — Pocket Ledger tracks HST as you go and keeps the numbers ready. See what’s included or book a setup call.
A rough Ontario calendar
- Monthly/quarterly: payroll remittances, and HST if you’re on a monthly or quarterly filing period.
- Quarterly: tax instalments, if you’re required to pay them.
- Year-end: T4s/T5s for people you paid, your income tax return, and HST if you file annually.
Your exact due dates depend on your filing frequency and year-end, which the CRA assigns. Your accountant confirms them — this is a map, not a schedule.
Keeping it boring (the goal)
Good bookkeeping through the year turns tax season into a non-event: the numbers are already there, HST is already tracked, and your accountant is advising instead of reconstructing. That’s the whole case for having the books set up and run for you rather than doing it all in a fortnight before a deadline.
Questions
What taxes does a sole proprietor pay in Ontario?
Income tax on business profit through your personal return, HST once you’re over the threshold, and payroll deductions if you employ anyone. CPP applies to your net self-employment income too.
How much should I set aside for taxes?
It depends on your profit and structure, so ask your accountant for a percentage — then actually move that percentage aside as income comes in, rather than hoping it’s there in April.
Do I need an accountant and a bookkeeper?
Most small businesses benefit from both — bookkeeping through the year, an accountant at tax time. See bookkeeper vs accountant.
This is general information, not tax advice. Rules and figures change and depend on your situation — your accountant makes the final call.