How to Model Self-Employed Clients (Sole Proprietorships or Partnerships)

Sole Proprietor

A sole proprietor is someone who is running a business that is not incorporated nor a partnership.  All income less expenses is taxed personally (T1), and the person is responsible for all debts. The sole proprietor:

  • is responsible to pay CPP contributions (both the employee AND employer portions) 
  • can deduct the employer portion of the CPP contribution from their taxable income
  • can opt out of paying EI benefit premiums

Partnership

Like being a sole proprietor, a partnership is NOT a separate legal entity (like a corporation). It's just a relationship/agreement on how income is split.  Income or loss is calculated at the partnership level and allocated to the partners. The partners then include this amount in calculating their own taxable income (T1).  Like a sole proprietor, a partner must pay both employee and employer portions of CPP and can opt out of paying EI premiums.

To model a Sole Proprietorship and/or a Partnership in Snap:

Select Scenario Setup -> Settings -> Tax & Inflation

Select or de-select the appropriate checkboxes to Pay CPP premiums (employer portion) and Pay EI Premiums

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