How much CPP do I pay as a self-employed sole proprietor?

11.9% of your net self-employed earnings between the $3,500 basic exemption and the $74,600 ceiling for 2026 — that's the combined employee and employer share, since there's no separate employer to pay half. Above that, CPP2 adds a further 8% (again, both portions) on earnings between $74,600 and $85,000.

Do I have to register for GST/HST as a self-employed contractor?

You must register once your worldwide taxable revenue exceeds $30,000 in a single calendar quarter or over the trailing four consecutive quarters. Below that 'small supplier' threshold, registration is optional.

Is it better to be a sole proprietor or incorporate?

It depends mainly on your income level and how much you can leave in the corporation rather than drawing out personally — incorporating only helps if the small-business corporate rate genuinely beats your personal marginal rate on income you don't need immediately, and it introduces its own compliance costs and PSB risk if you have one dominant client.

What's the PSB risk flag on this calculator?

It flags whether your incorporated setup — mainly a single ongoing client, limited business risk, no real ability to subcontract — resembles the profile the CRA treats as a Personal Services Business rather than a genuine active business. See our dedicated PSB calculator for the full cost if that reassessment happens.

Does incorporating reduce my CPP contributions?

Not directly on income you draw as salary — CPP still applies to T4 salary from your own corporation the same way it would from any employer. Dividends, however, are not earned income for CPP purposes, so a dividend-only owner-manager pays no CPP at all on that income, but also builds no CPP retirement benefit or RRSP room from it.

Self-Employed Tax Calculator Canada 2026 — Sole Proprietor & Incorporated

What sole proprietors and incorporated contractors really keep after CPP, tax and GST/HST

Self-employment tax in Canada isn't a single number — it depends heavily on whether you operate as a sole proprietor or through your own corporation, and on how much of your CPP contribution you're covering yourself. As a sole proprietor in 2026, you pay both the employee and employer portions of CPP (11.9% combined, versus 5.95% for a T4 employee) up to the $74,600 ceiling, plus 8% CPP2 on income between $74,600 and $85,000 — there's no employer to split that cost with.

This calculator works out your real 2026 take-home as a sole proprietor or incorporated contractor in Ontario, factoring in both-sides CPP, income tax on business profit, and a flag for whether your setup looks more like a Personal Services Business than a genuine independent business, because that changes the corporate tax math substantially.

How to use this calculator

Enter your gross contract income and reasonable business expenses to get net business profit.
Choose sole proprietor, where profit is taxed directly on your personal return, or incorporated, where profit is taxed at the corporate rate first and again when you draw salary or dividends.
Review the both-sides CPP and CPP2 contributions — as a self-employed person you cover the full 11.9%/8% yourself, with the employer half deductible from income.
Check the PSB risk flag if you're incorporated with one main client — it changes which corporate tax rate actually applies.

Self-Employed / Incorporated Contractor Take-Home Calculator

What sole proprietors and incorporated contractors really keep after CPP, tax and GST/HST

How to use this calculator

Frequently asked questions