When should I register for a GST/HST number?

You are required to register for a GST/HST number once your total taxable revenue exceeds $30,000 in a single calendar quarter or over four consecutive quarters. This threshold applies to most sole proprietors and side hustlers in Canada. Once you cross it, you have 30 days to register with the CRA. NorthOS tracks your revenue and alerts you when you are approaching the $30K threshold so you are never caught off guard.

Does NorthOS support T2125 and T776 tax forms?

Yes. NorthOS is built around the T2125 (Statement of Business or Professional Activities) and T776 (Statement of Real Estate Rentals) forms. Every expense category in NorthOS maps directly to a line on these forms, so when tax season arrives, your data is already organized the way the CRA expects it.

What is the "Idea Incubator" in NorthOS?

The Idea Incubator is a dedicated workspace inside NorthOS for business ideas you are still developing. You can log expenses, track early revenue, and document your concept before it becomes a formal business. This helps you build a paper trail from day one — which is useful if you ever need to demonstrate a profit motive to the CRA.

Does NorthOS use the Quick Method or Regular Method for GST/HST?

NorthOS supports both the Quick Method and the Regular Method for GST/HST remittance. When you set up your account, you choose which method applies to your business. NorthOS then calculates your net tax owing accordingly. If you are unsure which method is right for you, our resources section explains the difference and when each method makes financial sense.

Back to Resources

Tax Form Guide

T2125 Form Canada: The Complete Guide for Sole Proprietors

Form T2125 (Statement of Business or Professional Activities) is the CRA tax form every Canadian sole proprietor and self-employed person files as part of their T1 personal tax return. It's where you report your business income, claim your deductions, and calculate your net business income. This guide explains every section in plain language.

Who needs to file a T2125?

You file a T2125 if you earned self-employment income in Canada — including freelancers, consultants, contractors, side hustlers, eBay and Etsy resellers, rideshare drivers, tradespeople, and anyone running a sole proprietorship. You do not file a T2125 if your only income is employment income (T4) or investment income.

Where does T2125 fit in your tax return?

T2125 is not a separate tax return — it lives inside your T1 personal tax return. Your net business income from T2125 flows into your total income on your T1, where it's taxed at your personal marginal rate combined with provincial rates. This is what makes sole proprietorship different from incorporation — your business profit is your personal income.

The key sections of T2125

Part 1 — Identification

Your name, SIN, business name, business address, and your 6-digit CRA industry code (based on your primary business activity). If you don't know your code, CRA's T4002 guide has the full list.

Part 2 — Internet Business Activities

Only relevant if you earn income through a website. Report the percentage of your gross income that comes from internet sales or services.

Part 3A — Business Income

This is where you report your gross revenue. Line 8000 is your total gross sales, fees, or commissions. Line 8290 is your cost of goods sold if you sell physical products. Line 8299 is your gross profit.

Part 4 — Business Expenses

The largest section. Every deductible business expense has its own CRA line number. This is where you reduce your taxable income.

Part 7 — Calculation of Business-Use-of-Home Expenses

If you work from home, this section calculates your home office deduction based on the percentage of your home used for business.

Part 8 — Details of Other Business Activities

For farming, fishing, or multiple businesses. Most sole proprietors skip this section.

T2125 expense lines explained

CRA Line	Expense Type	What Goes Here
8521	Advertising	Website costs, online ads, business cards, social media ads
8523	Meals & Entertainment	Client dinners, networking events — 50% deductible only
8590	Bad Debts	Invoices you've written off as uncollectable
8690	Insurance	Business insurance premiums
8710	Interest & Bank Charges	Business bank fees, interest on business loans
8760	Business Taxes, Licences, Memberships	Business registration fees, professional memberships
8810	Office Expenses	Pens, stamps, small office items
8811	Supplies	Materials used directly in your work
8860	Professional Fees	Accounting, legal, bookkeeping fees
8910	Rent	Office or studio rent
8960	Repairs & Maintenance	Repairs to business equipment or workspace
9060	Salaries & Wages	Payments to employees or subcontractors
9200	Travel	Business travel expenses
9220	Telephone & Utilities	Phone and internet — business portion only
9270	Other Expenses	Software subscriptions, platform fees, anything else
9281	Motor Vehicle	Business use of your vehicle — requires mileage log
9945	Business-Use-of-Home	Home office expenses — calculated in Part 7
9936	Capital Cost Allowance	Depreciation on equipment and computers

The home office deduction

If your home is your principal place of business (you do more than 50% of your work there), you can deduct a portion of your home costs. Calculate your workspace as a percentage of your total home square footage. Apply that percentage to eligible expenses: heat, electricity, insurance, property taxes, and rent (or mortgage interest if you own). Your home office deduction cannot create or increase a business loss — unused amounts carry forward.

Capital Cost Allowance — why you can't just expense equipment

When you buy a computer, camera, or other equipment for your business, you can't deduct the full cost in the year of purchase. Instead it's depreciated over time through CCA. Computers fall under Class 50 (55% per year, half-year rule in year one = 27.5%). Keep your purchase receipt, date acquired, and cost — you need this every year you claim CCA.

GST/HST and T2125 — an important distinction

If you're registered for GST/HST, your T2125 income figures use pre-tax revenue — not the gross amount your clients paid including GST. The GST you collected belongs to CRA and is never your income. Line 8000 should show your revenue before GST. This is different from your GST34 return where Line 101 includes GST in the gross amount.

Key deadlines

Two important dates: your taxes owing must be paid by April 30 to avoid interest charges. Your T1 return (including T2125) can be filed as late as June 15 if you or your spouse have self-employment income — but any taxes owing still must be paid by April 30.

Common T2125 mistakes

Claiming 100% of mixed-use expenses

Phone, internet, and vehicle expenses must be prorated for business use only. CRA will ask for your calculation method.

Expensing equipment in full

Computers and equipment must be depreciated via CCA, not expensed in the year of purchase.

Putting software on the wrong line

Software subscriptions go on Line 9270 (Other Expenses), not Line 8760 (Business Taxes/Licences).

Conflating GST collected with income

If you're GST-registered, never include GST collected in your Line 8000 revenue figure.

NorthOS maps every transaction to the correct T2125 line

Every expense you log in NorthOS is automatically categorized to the right T2125 line. At year end your workpapers are ready to hand to your accountant — or file yourself.

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This guide is for informational purposes only and does not constitute tax advice. CRA rules can change — always verify with the CRA T4002 guide or a qualified tax professional.

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