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Step 8 of 12

Set up bookkeeping and income tax

Track sales, HST and expenses from day one.

Time
2–3 hours
Cost
Software from about $0–$30/month; accountant consult about $150–$300

Bookkeeping

Use simple software such as Wave, QuickBooks or Xero. Track sales, HST collected, HST you paid on purchases and expenses separately. Keep every receipt.

Income tax

As a sole proprietor you report business income on your personal tax return using form T2125.

You may need to pay income tax in instalments once you owe more than a few thousand dollars a year. Your accountant can tell you.

Records

Keep your records for six years.

One accountant meeting

A one-time consult early on is cheap compared with fixing mistakes later. Bring this checklist and ask about out-of-province sales.

Your checklist