Can You File Self-Employed Taxes Without a Business Name?

Freelancer. Gig worker. Fractional consultant. Sole proprietor. Independent contractor. There are so many names for self-employed professionals. Still, you might be wondering: Do you need an actual business name to run your own operation and file self-employed taxes?

When you work for yourself, navigating your taxes can be complex. And you want to make sure all your bases are covered when you submit your return. This way, you can stay compliant with Canada Revenue Agency (CRA) regulations, avoid any audits or penalties, and get your refund as soon as possible.

Here, you'll learn about whether you should register for a business name and discover helpful tips for filing your T1 tax return as a self-employed professional.

What are self-employment taxes?

Self-employment taxes are taxes that people pay on business income they generate while working for themselves. Meaning, they're not employees of a company that takes taxes out of their paycheque and provides them with a T4 slip.

Instead, self-employed individuals have to file their own business taxes. The tricky part is that self-employment taxes are filed the same way as personal taxes—with the same T1 Income Tax Return. This is different from corporations, which file taxes separately using a T2 Corporation Income Tax Return.

For example, say Jamie runs her own graphic design business and also earns money by renting out her guesthouse. She would use her T1 Income Tax Return to report all income and expenses from those two sources, along with any other income like capital gains from her stock investments.

Sole proprietorship vs. self-employment

Anyone who works for themselves—not an employer—is self-employed. So this could be someone who drives for Uber, makes money renting out a guest house, sells art on Etsy, or owns their own consulting business.

For tax purposes, self-employed individuals are considered sole proprietors. A sole proprietorship is a simple business structure defined as an unincorporated business that is not considered separate from its owner. This means that the owner and the business are treated as a single entity for legal and tax purposes. Again, this is different from corporations, which are treated as separate entities and file taxes using distinct forms.

Do you have to register for a business name in Canada?

No. Sole proprietors do not have to register for a business name to operate or file taxes in Canada. However, they can choose to if they want. For instance, say Priya Singh runs her own legal consulting business. As a sole proprietor, she can simply market and bill her clients using her own name, Priya Singh, or she can register for a business name like Singh Legal Strategies.

Why register for a business name if it's optional? It might help you market your business—like on social media ads or business cards—creating a sense of professionalism or establishing credibility as you grow your customer base.

How to register for a business name in Canada

To register for a business name in Canada, you need to go through the registry of your province or territory. The CRA provides a list of helpful links to those registries. The registration process typically involves filling out a form online and paying a fee, which varies by jurisdiction.

When do you have to register for a business number?

While sole proprietors aren't required to register for a business name, they do have to register for a business number (BN) with the CRA once they surpass $30,000 in sales within a certain period. That's because, once you exceed this threshold, you have to start charging the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your customers. And you need a BN to create your GST/HST account.

How to file your T1 tax return as a sole proprietor

Even if you're used to submitting your personal taxes with a T1 tax return, reporting your business income as a sole proprietor is a unique process.

To help, we'll break down what you need to know to file your self-employment taxes:

• Prepare the right tax form. Use the T2125 Statement of Business or Professional Activities form, which is part of the T1 income tax package, to submit your business income and expenses.
• Understand your tax rates. Income from self-employment is taxed at the federal and provincial rates for the year, just like personal tax rates.
• Deduct eligible expenses. Sole proprietors can deduct business expenses from their income, reducing the amount of tax they owe. Common expenses include office supplies, advertising costs, and internet bills. To expense depreciable assets, like equipment or vehicles acquired for business purposes, use the capital cost allowance (CCA) to deduct the cost of the expense over time.
• Complete a GST/HST return if needed. If you charge GST/HST to your customers, you have to report those charges to the CRA by submitting a GST/HST return.
• Submit by the filing deadline. The tax filing due date for sole proprietors and their spouses is June 15. If you have any balance owed, however, you must pay it by April 30 to avoid late-payment penalties.

Best practices for preparing self-employment taxes in Canada

Whether or not you choose to register for a business name, there are steps you can take to help streamline your bookkeeping throughout the year and prepare your self-employment taxes.

Start with these best practices:

Separate your personal and business accounts

Consider setting up different bank accounts or credit cards for your personal and business purchases. This way, it'll be easier to track business income and expenses. For example, that brunch with old school friends can go on your personal credit card. But that lunch meeting with a new client can go on your business credit card.

Organize business expenses throughout the year

Save yourself the headache of having to dig up old receipts in June. Instead, keep records of business purchases as you make them. Try organizing them into a spreadsheet of categories—like advertising, office supplies, and travel—so you're ready to report them on your tax return.

While you're busy running your business, it can be tough to stay on top of tax requirements. Use our handy TurboTax Self-Employed Tax Prep Checklist to organize all the information you’ll need to do your self-employment income taxes.

File self-employment taxes with confidence

No business name? No problem. Self-employed workers aren't required to register a company name in Canada. Still, there are many other steps you are required to take to meet CRA regulations and accurately file your self-employment taxes. This includes registering for a business number after passing a certain sales threshold and submitting your T1 Income Tax Return on time.

Navigating tax prep doesn't have to be overwhelming, either. TurboTax Assist & Review provides year-round support and step-by-step guidance to help you get every tax dollar you deserve.

Your self-employed tax situation, covered

Whether you’re a freelancer, side-gigger, independent contractor, or just have multiple sources of income, TurboTax can handle your return.

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