Before you gather a single receipt, decide how you’re going to file. It sounds backwards, but where your return ends up changes what you need to pull together at the start. Doing it in tax software, handing it to a professional, or filling in the forms yourself each asks for slightly different pieces in slightly different shapes. Start with the end in mind and tax season gets shorter.
This is written for sole proprietors filing a T2125 with their personal T1 return. Most of it also applies to a very simple corporation, but a T2 is a different animal with different software and different rules, so if you’re incorporated, read this for the thinking and then talk to someone about the specifics.
Option one: file it yourself
There are two ways to self-file, and they are not the same thing.
Tax software. TurboTax, H&R Block’s online product, Wealthsimple Tax, and a handful of others are certified by CRA to send your return through NETFILE. They walk you through it as a series of questions: how much did you earn, what did you spend on this, do you have that. As long as your numbers are already prepared and you have a clean set of books, the software carries you through the moving pieces of a T2125 and files it straight to CRA. You’ll need your NETFILE access code, which is printed on last year’s Notice of Assessment and shown in your CRA account. The current list of certified software, including the free ones, is on CRA’s NETFILE certified software page.
CRA’s own filing service. CRA now has a free service called SimpleFile. Here’s the thing: it is invitation-only and built for people with low income and a very simple return. If you’re running a business, even a small one, you almost certainly won’t be invited and it isn’t designed for you. Worth knowing so you don’t wait for a letter that isn’t coming. Details are on CRA’s SimpleFile page.
Self-filing with software is a good option when you’re just starting out, your revenue is modest, and your business is one thing. It’s also a useful education. The software asks you what category an expense belongs in, and you have to answer. It’ll flag when you’ve lumped things together that should be separate and remind you of write-offs you didn’t know existed. A lot of my clients learn more about their own business doing their first return in software than they would handing it over.
Option two: hire a professional
Taking it to a professional costs more, and the return is the same return. What you’re paying for is the person: someone who knows where the grey areas are, how to handle assets, and what your numbers are telling you about next year.
Here are the four situations where I’d stop DIY-ing and hand it over.
1. You’ve started buying assets. An asset is something you buy for the business, roughly $500 or more, that stays with the business past the year. A camera, a laptop, a POS system, a piece of equipment. These aren’t written off the way a subscription is; they’re depreciated over years using capital cost allowance, and getting the class and the rate right is where DIY returns go wrong most often.
2. Your business grew fast this year. Growth is the moment a professional earns their fee. They can walk you through ways to reduce what you owe, and start the conversation about whether it’s time to move from a sole proprietorship to a corporation. Software can’t have that conversation with you.
3. You’ve crossed $30,000 in revenue and aren’t registered for GST/HST. Once your taxable sales pass $30,000 over four consecutive calendar quarters (or in a single quarter), registration isn’t optional. It changes how you track income and expenses and what your bookkeeping has to capture. Get advice at this point so the books are set up correctly from the start, not fixed afterwards. The rule and the current threshold are on CRA’s when to register for GST/HST page.
4. You have more than one stream of income. You’re a photographer who also plans events and sells cupcakes on the side. We’re multi-passionate people; I get it. But every stream has its own expenses, and working out where each one belongs on the return is hard to do well on your own.
None of these mean you’ve outgrown doing your own books. They mean the tax return has become a professional-level job.
“But it’s expensive”
For most sole proprietors, it isn’t, or it doesn’t have to be. The thing that makes tax prep expensive is messy records, because your preparer is billing for time and most of that time is spent hunting and sorting. If your bookkeeping is clean, even if it’s a well-kept spreadsheet, the tax prep part is quick and priced accordingly. Cost is a real barrier for a lot of people in the early years, and I’d never wave it away, but the fix is usually cleaner books rather than avoiding the accountant.
The hybrid option most people don’t know about
This is what I recommend to a lot of clients in their first year or two, and it’s the best of both.
You do your own return in tax software, from your own books. Before you press file, you send it to us and say, “Can you check my work?” We go through it as a one-off consult, look at the records behind it, catch the pitfalls, and hand it back. Then you file it yourself.
You pay a consulting fee instead of a full preparation fee. You learn how your return is built, so next year you’re faster and more confident. And you know it’s set up correctly, so you’re not building next year’s return on this year’s mistake.
A word about using AI for your tax prep
You’re going to be tempted to ask ChatGPT, Claude or Copilot to do your taxes. Here’s where I’ve landed on that with clients.
AI is a good research assistant and a poor accountant. Use it to work through a question you’re stuck on, to explain what a line on the T2125 is asking for, to summarise a CRA page into plain English, or to help you sort and collate a year of receipts and reports into categories. That part it does well, and it can save you hours.
Do not rely on it for the answer. These tools make mistakes, they state wrong numbers with total confidence, they invent rules and thresholds that don’t exist, and they routinely mix up Canadian and American tax law. Nothing it tells you about a rate, a deadline or a deduction should go on your return until you’ve checked it against the CRA page or asked someone who does this for a living. It’s a resource for thinking through the problem, not a substitute for the professional at the end of it.
Which brings me back to the same point. Whether the first draft came from you, from software, or from an AI helping you organise, a second set of eyes on the books before you file is what catches the expensive mistakes. That’s exactly what The Books Check-Up is for.
Whichever way you file, file on time
If you’re filing a plain T1 with no business income, the deadline is April 30. If you’re a sole proprietor filing a T2125, you and your spouse or common-law partner have until June 15 to file.
Here is the catch that gets people every year. If you owe tax, interest on that balance runs from April 30, not June 15, even though you’re allowed to file in June. Wait the extra six weeks and you’re paying for the privilege. So my standing advice to self-employed clients is to ignore the June date. Get it done by April 30 with everyone else. You know what you owe, you pay it if you can, and you’re not carrying tax season into summer. Current deadline details are on CRA’s filing due dates page.
Accurately and on time. That’s the whole goal. Whether you do it yourself or ask for help doesn’t matter nearly as much as getting it in.
Not sure which option you are?
If you don’t know whether your books are clean enough to self-file, that’s the question The Books Check-Up answers. We go through your bookkeeping the way a tax preparer would, tell you what’s solid and what isn’t, and give you a recorded video walkthrough of what to fix, within 7 to 10 business days.
If you’d rather do the hybrid thing and have someone check your return before you file it, get in touch. That’s exactly what we do.