Short answer: In the first year, decide who will sign and invoice under the contract, check when GST/HST registration is required, keep business records from the first invoice, and reserve cash for income tax and CPP or QPP. The first filing depends on whether you operated as a sole proprietor, through a corporation, or both during the year.
This is the starting sequence. Each linked guide deals with a separate question in depth.
Before the first contract: decide who is doing the work
A sole proprietor reports net business income on a personal T1, generally using Form T2125. A corporation is a separate taxpayer that files a T2; the owner also reports salary, dividends or other taxable amounts on a personal return. Incorporating partway through the year does not turn earlier sole-proprietor income into corporate income. Keep the contract, invoices, bank deposits and transition date aligned with the entity that earned each amount.
A client request to incorporate is a reason to review the arrangement, not proof of a tax benefit. Estimate profit after expenses, how much cash you need personally, the cost of corporate administration and the actual working relationship. The incorporation decision guide organizes those factors; the PSB guide covers the corporate risk when the work resembles employment. A sole proprietor may instead face an employee-versus-self-employed question. If you have a draft contract, keep the signed version and any agency agreement.
Before invoices grow: check GST/HST registration
The CRA small-supplier test generally looks at more than CAD $30,000 of worldwide taxable supplies, including zero-rated supplies, in one calendar quarter or over four consecutive calendar quarters. It counts associated persons in the circumstances described by CRA. This is a revenue test, separate from income-tax profit.
Crossing the threshold in one quarter can require GST/HST on the supply that takes you over it. Crossing it over several quarters gives a different effective date: generally after the end of the month following the quarter in which the threshold was exceeded. If registration is required, the application is generally due within 29 days of the effective date. Track cumulative taxable supplies by quarter and check the date before issuing the next invoice. Voluntary registration can be appropriate earlier, but it also brings filing duties. See the GST/HST registration guide for the two timing rules and the filing guide for what follows registration.
U.S. client invoices can still count toward the registration threshold even when a particular service qualifies for zero-rating. Review the specific supply and retain evidence of the client’s non-resident status; a U.S. address alone does not settle every export rule. The U.S. client income guide covers the related income and currency records. Quebec contractors also need to check GST/QST registration through Revenu Québec.
From the first invoice: make the records usable
Use a dedicated business account where practical, keep each invoice and contract, and reconcile deposits to invoices and payment processor statements. Track GST/HST charged separately from revenue. Keep vendor invoices and receipts with an explanation of mixed personal and business use. For a corporation, record owner transfers separately from salary, dividends and reimbursed expenses; a bank withdrawal is not automatically a dividend or deductible salary.
A simple monthly routine is enough to prevent a first-year reconstruction: reconcile every bank and credit-card account, check unpaid invoices, classify expenses, review GST/HST balances and retain source documents. The document organization guide gives a record system; the 2026 filing checklist is the later collection list. If records are already missing, use the cleanup guide.
During the year: reserve tax cash and check instalments
Self-employment income generally has no income tax withheld at source. Outside Quebec, a sole proprietor may owe both employee and employer CPP portions, with the T1 calculation taking any T4 CPP contributions in the same year into account. Quebec uses QPP rules. Do not estimate the balance owing from invoices alone: use net income, other income and withholding, and the applicable pension-plan rules.
CRA’s individual instalment test generally requires net tax owing over CAD $3,000 in the current year and in either of the two preceding years; the federal threshold is CAD $1,800 for Quebec residents. A contractor with no qualifying prior-year balance may not yet be required to pay instalments, but still needs cash for the filing balance. Corporate income-tax and GST/HST instalments use separate tests. The income-tax instalment guide addresses the personal calculation.
At filing: identify every return and deadline
A sole proprietor generally files a T1 with T2125 for business income. Someone who left T4 employment during the year reports both employment and business income; the transition-year guide explains the records to separate. A corporation files a T2 for its own fiscal year and the owner files a personal T1 for salary or dividends received. GST/HST returns have their own reporting period. Quebec may add provincial personal and corporate returns.
Self-employed individuals generally have until June 15 to file their T1, but a balance owing is generally due April 30; check the CRA dates for the specific tax year. A corporation generally files its T2 within six months after its tax year-end, while its tax payment may be due earlier. Do not assume that filing and payment dates match.
What to bring to a first-year review
Bring the contract and any agency terms, a revenue and expense forecast, expected personal withdrawals, current-year invoices and bank records, prior-year tax information, GST/HST registration status, and any U.S. client or Quebec facts. The first-year contractor service page explains how Teplov CPA scopes the next step. A 15-minute introduction establishes fit; any Initial Review is agreed separately.