Business
Canada — Business: Sole Proprietorship
A Sole Proprietorship (commonly referred to as a sole trader) is the simplest, most common, and least costly business structure to establish in Canada. This structure is unincorporated and owned entirely by a single individual, creating no legal distinction between the business entity and the owner. Because of this lack of separate legal personality, the sole proprietor possesses unlimited personal liability, meaning their personal assets can be targeted to satisfy any business-related debts, lawsuits, or financial obligations. Sole proprietors report their business income and expenses directly on their personal T1 income tax return each year.
Key facts
- A sole proprietorship is unincorporated and has no separate legal status from its owner.
- The owner assumes unlimited personal liability for all business debts, obligations, and legal risks.
- Net business income is taxed directly at the owner's personal progressive income tax rate.
- Business registration is not required if operating solely under the owner's exact legal name.
- Operating under a distinct trade name requires registering the name in the province of operation.
- Sole proprietors must register for GST/HST if their gross taxable revenue exceeds $30,000 CAD.
- The business ceases to exist automatically upon the retirement or death of the sole proprietor.