V.R. writes that he's been asked to do a freelance project which would be a one-off for him and wonders if he can just use a personal invoice to bill the client as he doesn't want to open a business just for such a small amount of work.
But V.R. doesn't have a choice here. There is no such thing as a personal invoice. Only businesses can invoice. Freelance work counts as business income, and there is no set limit that you must make before the income counts. It's the simple fact that you're selling something for profit that makes it business income.
So V.R. is/will be a small business whether he likes it or not if he does freelance work.
The good news is that in Canada, in most provinces and territories, you do not have to register your business if you set it up as a sole proprietorship using your legal name with no additions.
So V.R. will not need to register his business. He will have to declare his business income on his T1 income tax form when the time comes and remember to keep all his receipts related to any freelance work he does. Depending on what kind of work he's doing, he may also need to be sure he has the required licenses to do what he's doing by contacting his municipality, the appropriate federal agencies, or using BizPal.
But that's it. Starting a sole proprietorship in Canada is really very easy.
And as for that invoice, here's what has to go on an invoice.
More on Business Registration
But V.R. doesn't have a choice here. There is no such thing as a personal invoice. Only businesses can invoice. Freelance work counts as business income, and there is no set limit that you must make before the income counts. It's the simple fact that you're selling something for profit that makes it business income.
So V.R. is/will be a small business whether he likes it or not if he does freelance work.
The good news is that in Canada, in most provinces and territories, you do not have to register your business if you set it up as a sole proprietorship using your legal name with no additions.
So V.R. will not need to register his business. He will have to declare his business income on his T1 income tax form when the time comes and remember to keep all his receipts related to any freelance work he does. Depending on what kind of work he's doing, he may also need to be sure he has the required licenses to do what he's doing by contacting his municipality, the appropriate federal agencies, or using BizPal.
But that's it. Starting a sole proprietorship in Canada is really very easy.
And as for that invoice, here's what has to go on an invoice.
More on Business Registration
- Do I Need to Register My Business?
- Forms of Business Ownership in Canada
- Business Registration by Province
Hmmm, that helps to clarify. We advise people that are starting a cleaning business and we are getting more and more interest from Canada.
Hi Susan!
Thank you a lot for helpful answer! It was great!
I would wondering if you can also direct me in few sentences to a right source about GST. I’m going to make a one time job (web project software part development) for a client that is out of my province, he is abroad. So, as far as I know: I don’t have to get PST from the client, but what about GST?
Thank you in advance!
Hello Vadim,
I have a whole collection of articles on the GST/HST you may want to have a look at. You don’t have to register for (collect and remit) GST/HST unless you will make more than $30,000 annually, although you can register if you want to, anyhow. Generally, you don’t have to charge GST to clients outside of Canada.
Hello. I have an additional question to this if I may. How old does a person have to be in Canada to be a sole proprietor? Is it 18 years old or can younger people make money in this way too? Also, does anybody know how this works in the U.S. (Do people have to register if they want to make money on their own)?
Hi Petr,
You have to be of legal age to start a business, so when you are registering to be a sole proprietor, the age depends on the province (18 in some provinces, 19 in others). However, if you are under legal age, you could always form a partnership with someone who was. And there’s nothing to prevent anyone of any age to buy a domain name and start a website as far as I know.