Entrepreneurship & Small Business

Employment and sole proprietor at the same time

  • Last Updated:
  • Jan 14th, 2022 8:41 pm
[OP]
Newbie
Jul 15, 2020
3 posts
1 upvote

Employment and sole proprietor at the same time

I am full time employee and self employed at the same time. I am going to establish a Sole Proprietorship in the near future. My employer pays CPP/EI. Will I have to pay CPP as a sole proprietor in this case?
9 replies
Penalty Box
Jun 24, 2015
6876 posts
2155 upvotes
0 downvotes
sole proprieters do not pay cpp/ei unless they have a payroll account, do u have a payroll account or just a gst account?
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[OP]
Newbie
Jul 15, 2020
3 posts
1 upvote
I have neither payroll account nor GST account. I provide services to non Canadian companies, so I don't need GST.
Jr. Member
Jul 9, 2015
170 posts
215 upvotes
If your full-time earnings are around $60k (roughly), then your employer is already contributing towards your CPP annual cap so none of your sole proprietor earnings will be paying CPP.

If you're earning less than $60k, then you will need to contribute towards your CPP for the difference (e.g. if your salary is $40k, then you will need to pay almost 12% for the first $20k you earn as sole proprietor).

And I think there's no CPP contribution for first $3.5k.

I'm not an accountant Smiling Face With Open Mouth
Member
Jun 23, 2010
313 posts
99 upvotes
GoodFellaz wrote: sole proprieters do not pay cpp/ei unless they have a payroll account, do u have a payroll account or just a gst account?
Sole props pay both employer and employee CPP when they file their income tax return.

Tiberious
Your friendly Ontario neighbourhood accountant
Deal Addict
Mar 3, 2018
2876 posts
3188 upvotes
GTA
AltAlt wrote: I have neither payroll account nor GST account. I provide services to non Canadian companies, so I don't need GST.
You don't need a GST account to collect on your zero rated sales to non resident companies. But it may be in your interest to have a GST account to claim a refund on any GST you paid in your business.
Deal Addict
Nov 6, 2015
1069 posts
664 upvotes
Guelph, ON
GoodFellaz wrote: sole proprieters do not pay cpp/ei unless they have a payroll account, do u have a payroll account or just a gst account?
I think you are misinterpreting Sole Proprietor = Incorporated. Sole proprietors definitely do pay CPP, including the employer side.
Penalty Box
Jun 24, 2015
6876 posts
2155 upvotes
0 downvotes
sole proprieters can be incorporated or not, its up to them, when i was one, i never paid CPP/EI deductions, but i did give my accountant my paper work maybe i paid it at personal income tax time? how do i check?
Say NO to the WAR!
PEACE is the answer!
Member
Jun 23, 2010
313 posts
99 upvotes
GoodFellaz wrote: sole proprieters can be incorporated or not, its up to them, when i was one, i never paid CPP/EI deductions, but i did give my accountant my paper work maybe i paid it at personal income tax time? how do i check?
If you are a sole prop only, you didn't pay EI (unless you voluntarily registered for it) but you did pay CPP for both employee and employer. It is automatically included in your tax balance due.

If you are an employee and a sole prop, you won't have to pay any CPP on your sole prop income if you've already reached the max pensionable earnings from employment income (2022: $64,900)

You can see how much CPP/EI you paid on your old tax returns by looking at line 42100; EI is on line 42120.

Tiberious
Your friendly Ontario neighbourhood accountant
Deal Addict
Nov 6, 2015
1069 posts
664 upvotes
Guelph, ON
GoodFellaz wrote: sole proprieters can be incorporated or not, its up to them, when i was one, i never paid CPP/EI deductions, but i did give my accountant my paper work maybe i paid it at personal income tax time? how do i check?
Sole proprietors and incorporated are opposites, you can only be one or the other.

A "sole proprietor" and the person are one and the same entity, what you own/owe is the same as what the business does. A corporation is considered a distinct entity from any individual person, the corporation has it's own assets and liabilities.

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