The sole proprietor year end: what to do before 31 December
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Most self-employed people in BC have a 31 December year end. The return is not due until June, but the facts it needs are fixed on the last day of the year.
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Short answer: self-employed individuals generally have to use a 31 December year end. For 2026, the T1 return is due on Tuesday 15 June 2027, but any tax owing is due on Friday 30 April 2027. Before 31 December, reconcile your accounts, list what customers owe you and what you owe suppliers, count any stock, and gather the receipts for the year.
What the year end means for a sole proprietor
The CRA says self-employed individuals generally have to use a 31 December year end. An eligible individual may be able to use another method that allows a different year end, and a fiscal period cannot be longer than 12 months. Ask before choosing anything other than 31 December.
Most businesses must report on the accrual method: income in the period you earn it, whenever you are paid, and expenses in the period you incur them, whether or not you have paid them. Only farmers, fishers and self-employed commission agents can choose the cash method. That is why the unpaid invoices and bills on 31 December matter.
Before 31 December
Counting and valuing stock
If you sell goods, the CRA asks for an actual stock count at the end of each fiscal period, unless you use a perpetual inventory system. You can value the whole inventory at fair market value, or value each item at its cost or its fair market value, whichever is less. Once you choose a method, you have to use it consistently.
A count sheet with the date, the items, the quantities and the cost of each is the record. Keep it with the year’s books.
What the return needs from the books
Business income goes on Form T2125. Its sales line starts from gross sales including the GST/HST collected or collectible, and then takes out the GST/HST, PST, returns, allowances and discounts. Books that keep sales tax in its own accounts, rather than mixed into sales, make that line a copy rather than a calculation.
- Sales, with GST/HST and PST recorded separately
- Expenses by category, with receipts behind each
- The closing stock figure from the count
- Equipment and vehicles bought, for capital cost allowance
- The business-use share of the home and the vehicle, from the logs
The dates for the 2026 year
| Date | What is due | Who it applies to |
|---|---|---|
| Tuesday 15 December 2026 | The last 2026 tax instalment | Anyone whose net tax owing is over CAD 3,000 for 2026 and was over CAD 3,000 in 2025 or 2024 |
| Friday 15 January 2027 | Payroll remittance for December, or for October to December | Sole proprietors with employees, as regular or quarterly remitters |
| Monday 1 February 2027 | GST/HST return for December or the fourth quarter, and the PST return for December, the fourth quarter or the 2026 year | Monthly and quarterly GST filers, and PST registrants on any of those periods |
| Monday 1 March 2027 | T4 and T4A slips for 2026 | Sole proprietors with employees, or who paid T4A amounts |
| Friday 30 April 2027 | Any 2026 tax owing, and the annual GST/HST payment | Sole proprietors with a 2026 balance owing; the GST payment for annual filers |
| Tuesday 15 June 2027 | The 2026 T1 return, and the annual GST/HST return | Self-employed individuals and their spouses or partners |
Your own notices can assign different GST or PST periods. When a date falls on a weekend or holiday, it moves to the next business day.
How long to keep it
You are generally required to keep your records for at least six years from the end of the last tax year they relate to. For a return filed late, the six years run from the date you filed it. That includes the count sheets, the logs and the receipts, not only the return.
Questions people ask
Does a sole proprietor have to use a 31 December year end?
Generally, yes. An eligible individual may be able to use another method that allows a different year end, and no fiscal period can be longer than 12 months. Ask before choosing one.
When is the self-employed tax return due for 2026?
Tuesday 15 June 2027. Any tax owing is due earlier, on Friday 30 April 2027, and interest runs on a balance unpaid after that.
Do unpaid invoices count as income at year end?
Under the accrual method, which most businesses must use, yes: income is reported in the period you earn it, whenever you are paid. Bills you owe at year end are expenses of the same year.
Do I have to count my inventory?
If you sell goods, yes, at the end of each fiscal period, unless you use a perpetual inventory system. Value it at fair market value, or at cost or fair market value item by item, whichever is less, and use the same method every year.
Do I have to pay tax instalments as a sole proprietor?
Only if your net tax owing is more than CAD 3,000 this year and was more than CAD 3,000 in either of the two years before. The due dates are 15 March, 15 June, 15 September and 15 December.
All the tax dates for early 2027 →
What business expenses you can deduct →
Home office and vehicle expenses →
CPP when you are self-employed →
Want this handled for you
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