Can I draw a salary as a sole proprietor?

Your drawing from your salary is not considered a salary itself—it depends on how your business is structured.

When you pay yourself from your business, not all payments count as business expenses—and that’s totally normal depending on your business structure!

If you’re a sole proprietor or single-member corporation in Canada, your owner’s draw or dividend is not an expense. It’s a withdrawal from equity, so it won’t show up on your Profit & Loss statement.

For incorporated businesses paying salaries, your salary is an expense and should be recorded as such, but dividends or distributions are still equity transactions—not expenses.

Getting this right is key to keeping your financials clean and compliant with CRA rules. Mislabeling draws or dividends as expenses can throw off your reports and tax filings.

Common FAQ