As a sole proprietor in Canada, June 15th is your official tax filing deadline. And whether you’ve already filed or are scrambling to wrap it up, there’s one major question you need to ask yourself:
Do you have the money set aside to pay your tax bill?
If the answer is no—then like many other small business owners, you’ve just created yourself a debt. And I say that from experience.
The Big Mistake I Made as a Sole Proprietor
I’m Janet Mercredi, a certified Profit First Professional. And I’m here to share a personal story I hope you’ll learn from—because I sure did.
When I first started my sole proprietorship, I did what so many others do. I had a business account, I spent money on business lunches and lattes, and I assumed it was all a write-off. I figured, “It’s my business now—I can spend the way I want.”
But I didn’t realize that I was slowly draining my business dry.
When June 15th rolled around, I was hit with a five-figure tax bill.
And guess what? I had already spent the money.
Profit First Changed Everything
That year, I discovered the Profit First system, and it completely changed how I handled money in my sole proprietorship. Profit First isn’t an accounting tool—it’s a cash management system. It helps you manage your business based on real behavior, not just spreadsheets.
After implementing Profit First, I stopped treating my income like free money and started assigning every dollar a job—including setting aside money for taxes.
My Weekly Tax Habit for Sole Proprietorship Taxes
Here’s the exact habit that saved me—and that you can start this week:
Open a separate business bank account (if you don’t already have one).
Every Friday, transfer 1% of your account balance into a second account labeled “TAXES.”
Increase that percentage monthly:
July: 2%
August: 3%
September: 4%
And so on…
By next June, you’ll have money sitting in that account—ready to cover your sole proprietorship taxes in Canada.
Avoid the Latte Mindset
Let’s be real: that $5 Starbucks latte you just “wrote off” might save you $2.50 in taxes.
Is it worth it? Probably not.
The Canada Revenue Agency allows only 50% on meals and entertainment. And trying to squeeze every dollar into deductions without managing your cash flow is a fast track to trouble.
Final Thoughts (and a Free Tool to Help)
As a sole proprietor in Canada, you’re expected to pay 25–35% of your net income in taxes. If you don’t plan for that, you’re not avoiding taxes—you’re building debt.
But you can turn things around—just like I did.
🛠️ Need help paying off your current tax bill?
Download my free Debt Reduction Calculator to create a plan that won’t sabotage next year’s finances.
Your future self will thank you for it.
