Starting Out Self-Employed: How to Register Your Business – A Complete Guide by a Montreal CPA Firm Near You

Starting out self-employed in Canada is exciting—but many new freelancers and sole

proprietors begin working without knowing the proper steps to legally register their

business. Whether you're consulting, offering services, selling online, or starting a side

gig, you may need a business number, a GST/HST registration, and possibly a

provincial business name registration depending on the province. Misunderstanding

these steps leads to CRA issues, unregistered tax obligations, and missed deductions.

This guide explains how to register as a sole proprietor or partnership in Canada, how

to obtain a CRA business number, when to register for GST/HST, and what provincial

registrations are required.

Legal and Regulatory Framework

Self-employment registration processes are governed by several federal and provincial

laws.

Under the Income Tax Act, any individual carrying on business must report all business

income on Form T2125 even if they are not formally registered. CRA requires a

Business Number (BN) if the business must register for GST/HST, payroll, or

import/export programs. GST/HST registration is governed by the Excise Tax Act,

requiring registration when taxable revenues exceed $30,000 in a rolling 12-month

period. Provincial business name registrations are governed by each province’s

corporate law—for example, the Registre des entreprises (Québec), the Ontario

Business Names Act, or the BC Business Corporations Act. Sole proprietors using

their legal personal name may not need a provincial name registration, but

partnerships almost always do. These laws form the structure for registering a self-

employed business in Canada.

Key Court Decisions

Important court cases highlight the responsibility of self-employed individuals to properly

register and report business income. In MacDonald v. Canada, the court confirmed that

individuals carrying on business—even without formal registration—are still legally

required to report business income. In Walls v. Canada, CRA reassessed a taxpayer

who argued they were “just freelancing” and therefore exempt from GST/HST

registration; the court held that exceeding the small supplier threshold triggers

mandatory GST/HST registration regardless of formal business structure. In Kossow v.

Canada, failure to maintain proper records for a self-employed business resulted in

denied deductions. These decisions reinforce that registration and compliance are

required as soon as business activities begin.

Why CRA Targets This Issue

CRA monitors new self-employment activity closely because many new freelancers fail

to register for GST/HST, underreport income, or fail to keep records. CRA checks T4A

slips, online platform income, bank deposits, and third-party payment processors

(PayPal, Stripe, Uber, Upwork) to detect unreported business income. CRA also targets

unregistered businesses whose revenues exceed the small supplier threshold without

GST/HST registration. Because new entrepreneurs often lack guidance, errors are

common—making this a frequent CRA review area.

Mackisen Strategy

At Mackisen CPA Montreal, we help new self-employed individuals register correctly

from day one. Our system includes determining whether sole proprietorship or

partnership is appropriate, registering the business name provincially if required,

obtaining a CRA Business Number, setting up GST/HST or QST accounts, and

providing a structured bookkeeping system. We ensure compliance with CRA small-

supplier rules, advise whether early GST/HST registration is beneficial, and guide

clients through their first filings. Our approach ensures new entrepreneurs operate

legally, maximize deductions, and avoid CRA issues from the very beginning.

Real Client Experience

A new consultant began earning over $40,000 but failed to register for GST/HST. CRA

assessed uncollected tax, creating a large debt. We registered the business

retroactively, filed past returns, and negotiated reduction measures. Another client

operated an online shop under a trade name without provincial registration, causing

bank and CRA verification issues. We properly registered the business name, obtained

the BN, and aligned all tax accounts. A third client started a partnership informally with a

friend; CRA questioned income allocation. We formalized the partnership agreement

and corrected filings to avoid penalties.

Common Questions

New entrepreneurs often ask whether they must incorporate. No—sole proprietorship is

the simplest structure. Others ask whether a business number is required immediately.

Only if registering for GST/HST, payroll, or other CRA programs. Some ask whether

they must register a business name. Only if operating under a name different from your

legal name. Another common question: Should I voluntarily register for GST/HST? Yes,

if you want to claim ITCs and your clients are businesses.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps

new entrepreneurs start their self-employed journey with full compliance and

confidence. Whether registering your business, obtaining tax accounts, or guiding your

first year of bookkeeping, our experts ensure precision, transparency, and full CRA

protection.