A sole proprietorship is an unincorporated business that is owned by an individual and that generally has few to no employees. In other words, sole proprietors are the smallest of the small businesses. They have tax obligations similar to those of larger businesses but have less resources to handle them on their own.

With the goal of creating more positive client experiences and in keeping with the People First approach, the Canada Revenue Agency (CRA) held consultations with sole proprietors in November 2023. Discussions focused on:

• gaining a deeper understanding of their tax filing experiences, including how they feel throughout their interactions with the CRA
• identifying the challenges they face in meeting their tax obligations
• capturing improvement ideas

Who we consulted

The CRA hired a third party to recruit sole proprietors for the consultations. Participants represented diverse industries and demographics.

From November to December 2023, the CRA consulted with 37 sole proprietors through:

• 3 virtual group sessions, each with 6 to 8 participants
• 17 individual interviews

Key findings

The CRA learned that the tax filing experiences of sole proprietors are unique and vary based on several factors such as level of organization, past experiences and knowledge, access to guidance, established processes, and business type.

Overall, participants want the CRA to make tax filing easier, provide better support to comply with their obligations, and accommodate the specific needs of sole proprietors.

Content and guidance products

Participants had difficulties finding, navigating and understanding CRA web pages and identifying information relevant to them as sole proprietors. They expressed a need for improved content about business expenses and GST/HST.

Connecting with the CRA

Participants described the contact centre agents as courteous and helpful and appreciated speaking with a live person. However, long wait times were a common pain point.

CRA accounts

For CRA accounts, challenges signing in is the biggest barrier, resulting in delays in completing tasks or choosing to use other channels instead. Participants would also like to see a simplified sign-in process when needing to access both My Account and My Business Account.

Personalized support

Participants spoke about needing more hands-on support to learn about their tax obligations and make sure they are following good practices. Most participants were unaware of the CRA’s Liaison Officer service, which offers free, personalized support to small businesses owners and self-employed individuals. Once information was shared, participants expressed a desire to learn more and saw how the service could offer valuable assistance.

Tax filing

For most participants, taxes are not their area of expertise. Participants expressed wanting to be compliant, but unknowingly making mistakes due to the complexity of the tax system. This leads to fear of making a mistake and uncertainty in what to do. Almost all participants relied on tax filing guidance from a professional, family and friends, or tax software, and continue to learn each year.

Bookkeeping

Bookkeeping is a significant investment of time and effort, with the majority of participants perceiving it as the most challenging aspect of running a business and filing their taxes.

Penalties and interest

Penalties and rising interest rates can quickly have a large impact on small businesses, making it hard to catch up and causing additional stress.

Payroll

The additional administrative work with payroll and costs of having employees was perceived as a burden. For these reasons, many participants chose not to have employees at all.

Improvements to date

Based on feedback from sole proprietors and stakeholders, the CRA has made several service improvements to help small business owners better understand their tax obligations, navigate online services more easily, and access tailored support.

Updated web content

The CRA has improved key topics on Canada.ca, such as make a payment, GST/HST for businesses, and registering your business with the CRA, to make information easier to find and understand.

Generative Artificial Intelligence (GenAI) chatbot

The GenAI chatbot beta is being tested to improve digital services and support self-service. Available 24/7, it answers questions relating to personal income tax, accessing a CRA account, charities, businesses, and trusts. Business owners can find information on fundamental topics, like business registration, tax obligations, payroll deductions, and GST/HST returns, as well as on more specialized areas. These include detailed guidance on tax credits, compliance requirements, and industry-specific regulations.

Easier CRA account access

The CRA’s Document Verification Service now allows you to register for a CRA account without waiting for a code in the mail. If you are locked out of your account or forgot your sign-in information, you can re-register online without needing to call. A new single sign-in feature also allows you to sign in once to access My Account, My Business Account, and Represent a Client.

More services available online

You can now obtain a GST/HST access code directly in My Business Account. In addition, registrations for a new Business Number (BN) or CRA program accounts must be completed online, making the process faster, easier, and more secure.

Enhanced learning and support

The CRA is increasing awareness of its Liaison Officer service, so that more small business owners can benefit from free, personalized help to understand their tax obligations and business deductions, ask tax-related questions, and learn how to avoid common errors. A liaison officer can provide recommendations to strengthen bookkeeping systems and offer suggestions related to books and records.

New content on self-employment income and responsibilities has also been added in Learn about your taxes, a free, self-guided online learning tool.

Conclusion

The CRA would like to thank all those who participated in the consultations for their valuable feedback.

Recognizing there is more work to do, the CRA is committed to keeping people at the centre of service design and delivery. That means staying responsive, building on what’s working well, and adapting to meet changing expectations, feedback, and needs.

As part of its ongoing effort to address key service challenges, the CRA is using the feedback from this consultation, as well as from other sources, to guide future improvements.

Related information

In the fall of 2024, the CRA also held public consultations with individuals, non-professional representatives, and tax professionals to learn about their recent service experiences.

To learn more about the findings and other service improvements, refer to the CRA service consultations 2024 – Summary report.