How to Pay Yourself as a Sole Proprietor

If you have started your own business, you might be wondering how to pay yourself.

Do I need to set up payroll? Am I allowed to just take money out of my business profits? What about claiming it on my taxes?

When you are a sole proprietor (not incorporated), you don’t have to do anything fancy. You are free to take out as much or as little money out of your business as you like.

Why? Because, in the eyes of CRA, you and your business are one. Each year, CRA will calculate taxes on your net income (income minus expenses). This is done on your personal tax return under your name, so that profit after taxes belongs to you.