Sole Proprietorship Examples in Ontario: 10 Real Businesses and How They File

Prepared by Toronto Tax & Accounting Solutions Inc. and reviewed by Behroz Rizvi, owner. This article provides general information and may not apply to every tax situation.

If you earn money on your own in Ontario and never set up a company, you are almost certainly a sole proprietor. Most people in this position never chose the label. They just started driving, designing, cutting hair or fixing houses, and the CRA treats that as a sole proprietorship automatically. Below are ten common examples, what each one has to keep track of, and the filing rules they all share.

What is a sole proprietorship, in one paragraph?

A sole proprietorship is a business owned and run by one person, with no separate legal entity. You and the business are the same taxpayer. You report the income and expenses on your personal return (form T2125, filed with your T1), you pay tax on the net profit, and you are personally responsible for the business’s debts. There is no incorporation fee, and in many cases there is nothing to register.

Ten sole proprietorship examples in Ontario

1. Freelance designer, writer or developer

Clients pay you by invoice or e-transfer, often with no tax withheld. Keep every invoice, your software and equipment receipts, and a clear split between personal and business spending. If your revenue grows past $30,000 you will have to register for HST (see below).

2. Uber, Lyft or DoorDash driver

You are self-employed even though an app issues the payments. The CRA says commercial ride-sharing drivers must register for GST/HST from the first day, whatever their income. Mileage matters more here than almost anywhere else, so keep a mileage logbook from day one. We cover the full picture on our Uber and DoorDash tax filing page.

3. Contractor, handyman or renovator

Some customers pay cash or cheque, some pay through a general contractor. Every dollar counts as income whether or not you received a slip. Materials, tool purchases, vehicle costs and subcontractor payments are the main expense categories to document.

4. Hairstylist, barber or esthetician renting a chair

If you rent a booth and keep your own client money, you are usually a sole proprietor rather than an employee. Chair rent, supplies and licensing fees are typical expenses. Tips you receive are income too.

5. Private tutor or music teacher

Often a home-based business with modest costs. The records that matter are lesson income by month, any space you rent and materials you buy. If you work from home, the home-office rules are specific, so check them before claiming anything.

6. Online seller on Etsy, Amazon or Shopify

Platform payouts are not your income. Your income is the sales before the platform takes its fees, and those fees become expenses. Track inventory, shipping and any sales tax collected.

7. Independent consultant or bookkeeper

Usually a handful of larger clients, invoiced monthly. This is the profile that most often benefits from a later move to a corporation once profit consistently exceeds what you spend. See our comparison of sole proprietorship vs corporation in Ontario before you decide.

8. Photographer or videographer

Equipment is the big-ticket item, and it is usually claimed over several years rather than all at once. Keep purchase receipts and the date you started using each item.

9. Cleaner or home-care worker with their own clients

If you set your own schedule and prices and bring your own supplies, you are likely self-employed. If a company controls how and when you work, you may actually be an employee, and that changes how you file.

10. Truck owner-operator

Fuel, insurance, maintenance and the cost of the truck are large numbers that need careful records. Owner-operators also face cash-flow swings, so planning for the tax bill during the year matters.

What every Ontario sole proprietor has to deal with

• Filing deadline: self-employed individuals have until June 15 to file, but any tax owing is still due April 30. Interest starts after April 30.
• CPP: you pay both the employee and employer share of Canada Pension Plan contributions on your net self-employment income.
• HST: you must register once your taxable revenue passes $30,000 over four consecutive calendar quarters. Some businesses, such as ride-sharing, must register from the start. Our guide to GST/HST registration for freelancers walks through it.
• Business name: if you operate under any name other than your own full legal name, Ontario requires you to register it. See business name registration in Ontario for how it works and what it costs.
• Instalments: if your net tax owing is more than $3,000 this year and in either of the two previous years, the CRA expects quarterly instalments.
• Records: keep income and expense records for six years. Our self-employed records checklist shows what to keep.

A simple worked example

Take a hypothetical freelance designer in Toronto. She invoices $60,000 during the year and has $12,000 of business expenses: software, a laptop, a share of her phone bill and professional fees. She reports $60,000 of income and $12,000 of expenses on form T2125, so her net business income is $48,000. That $48,000 is added to her other income and taxed at personal rates, and she also pays CPP on it. Nothing was withheld during the year, so she should set money aside as she goes. The numbers are an illustration only, not a tax calculation.

When does a sole proprietor stop being the right structure?

Usually when profit stays well above what you spend personally, when you want to separate business risk from your home and savings, or when you plan to hire or sell. Even then, incorporating mostly defers tax on money you leave in the company. We lay out the trade-offs, with Ontario numbers, in sole proprietorship vs corporation, and the process in incorporating in Ontario.

Common questions about sole proprietorships

Do I need to register a sole proprietorship in Ontario?

Only if you use a business name different from your own legal name. If you operate as “Jane Smith” and nothing else, no name registration is needed. You may still need a GST/HST account and any licences your trade requires.

Is a gig worker a sole proprietor?

In most cases yes. Delivery and ride-share workers are generally treated as self-employed and report income on form T2125.

Can a sole proprietor have employees?

Yes. Once you hire, you must register a payroll account and remit source deductions. A sole proprietor is still personally responsible for the business.

Do I pay less tax as a sole proprietor?

Not automatically. You pay personal tax on all net profit in the year you earn it, whether you take it out or not.

How we can help

We prepare personal returns for self-employed clients across Ontario and Canada, from $149.99 before HST, and we confirm the fee in writing before we start. If you are not sure whether you are self-employed, or what you can claim, book a free consultation or call (437) 410-7999. We are a Scarborough office at Office 19, 695 Markham Road, serving Toronto and the GTA, and we also file remotely. You can read more on our self-employed tax page.

Sources

• Canada Revenue Agency: Sole proprietorships and partnerships
• Canada Revenue Agency: GST/HST information for taxi operators and commercial ride-sharing drivers
• Canada Revenue Agency: Self-employed? Make filing easier with these tips

Last reviewed: October 19, 2026. This article is general information, not advice for a specific business.