What does the CRA require of a Canadian cleaning company?

What to take away

What the CRA expects from a cleaning company file

The agency wants four things from a janitorial contractor: a registered business number, correct GST/HST treatment on contract revenue, payroll remittances for staff, and a corporate return filed each year.

Your file has to match your invoices. Bill a property manager for monthly janitorial work and that revenue is taxable at your province's rate. The CRA checks that the tax collected lines up with what you reported.

Keep business and personal banking separate from the first deposit. Bank statements are among the first things requested in a review, and clean records shorten it.

Records run six years from the end of the tax year they relate to. That covers invoices, receipts, contracts and payroll records.

For the operational side of the same file, see our guide to commercial cleaning operations.

Registering: business number, GST/HST account and payroll account

Registration starts with a nine-digit business number, the identifier the CRA hangs program accounts on. You can register online, by phone, or by post.

Most cleaning companies need three program accounts: GST/HST, payroll, and corporate income tax. A payroll account is required as soon as you hire your first employee, part-time included. A sole proprietor with no employees may not need one.

Have your legal name, address, service description, estimated revenue and province of operation ready before you start. The CRA issues the number and the accounts together. Its own walkthrough sits at Starting a business - Canada.ca.

If you are still planning the launch, our article on commercial cleaning startup costs covers the funding side.

What you need before you register

Once registered, returns and payments go through CRA My Business Account.

The small supplier threshold and mandatory GST/HST registration

The small supplier rule lets a new cleaning company operate without a GST/HST account until revenue crosses the threshold. For most businesses that is $30,000 in taxable revenue over four consecutive calendar quarters.

Cross $30,000 inside a single calendar quarter and registration is immediate. You charge GST/HST on your next sale.

Below the threshold, a sole proprietor can register voluntarily. That unlocks input tax credits on supplies and equipment, at the cost of filing returns even in months with no revenue.

Once registered, you charge GST/HST on every taxable cleaning contract. Ontario runs 13% HST; Alberta has 5% GST. Confirm your own province's rate with the CRA before you quote.

Input tax credits on supplies, equipment and subcontractor invoices

An input tax credit returns the GST/HST you paid on a business purchase. Spend $1,000 on supplies at 13% HST and the $130 is claimable, provided the invoice is valid.

A valid invoice shows the supplier's GST/HST number, the tax amount, and the date. Degreasers, floor finish, mop heads and vacuum bags all qualify. So do floor machines, pressure washers, and vehicles used for work.

Subcontractor invoices qualify only if the subcontractor is registered. An unregistered subcontractor cannot charge GST/HST, so there is nothing to claim.

ITCs go on your GST/HST return. The CRA may review them, so hold the receipts for six years. Our compliance checklist for new owners lists what to track.

Common ITC mistakes

Filing and remitting GST/HST on contract revenue

Returns are due even in a period with no revenue. Filing runs online through CRA My Business Account, by phone, by mail, or through a tax preparer. The CRA explains the options in How to file - File your GST/HST return - Canada.ca.

Reporting frequency follows revenue. Most cleaning companies file quarterly or annually; above $1.5 million the CRA assigns monthly filing.

The deadline is one month after the reporting period ends. Quarterly filers face April 30, July 31, October 31 and January 31.

Late filing draws a penalty of 1% of net tax plus 0.25% for each month late, to a maximum. The Quick Method, available under $400,000 in revenue, remits a fixed percentage of revenue instead of tracking ITCs on most purchases.

Payroll deductions, T4 slips and remittances for janitorial staff

Hiring janitorial staff means deducting CPP, EI and income tax from each pay, then remitting them. You also pay the employer share: an amount equal to the employee's CPP contribution, and 1.4 times the EI premium.

Remit by the 15th of the month following the pay period. Pay monthly and the deadline is the 15th of the next month.

T4 slips go to each employee by the last day of February, with a T4 Summary filed alongside. Both are available through CRA My Business Account or payroll software; forms sit at CRA Forms and publications - Canada.ca.

Subcontractors are not employees. No CPP, EI or income tax comes off their invoices, but a written contract should show they are independent. Our licensing and compliance guide covers the rest of the paperwork.

Corporate tax, records retention and the forms a cleaning firm keeps

A corporation files a T2 return every year, due six months after fiscal year-end. A sole proprietor reports business income on a personal T1 instead.

Both file GST/HST returns and remit payroll. Both keep records for six years from the end of the tax year: sales invoices, purchase receipts, payroll records, bank statements.

The core forms are T2 for corporate tax, T4 for payroll, the GST/HST return, and T2125 for sole proprietors. The CRA publishes all of them.

Provincial obligations sit alongside the federal ones. In Ontario, for example, a cleaning contractor may need Workplace Safety and Insurance Board coverage. Business taxes generally are set out at Business taxes - Canada.ca and Taxes - Canada.ca.

Where cleaning companies fail in year one

Missing the GST/HST registration deadline is the most common failure. Cross $30,000 without registering and the CRA can assess the tax you should have collected, plus penalties.

Late payroll remittances are the second. Interest and penalties follow, and the CRA can pursue collection.

Late GST/HST returns trigger penalties even when no tax is owed. Filing is the obligation, not paying.

Audit triggers include large ITC claims, repeated late filings, and reported revenue that does not match bank deposits. Data matching finds the gaps. File on time, remit promptly, and keep the records; anything beyond that belongs with an accountant.

If you are starting out, see our guide on how to start a commercial cleaning business.

Common questions

Do I need to register for GST/HST if I only clean homes?

Yes, once taxable revenue passes $30,000 over four consecutive quarters. Residential cleaning is taxable, including housekeeping for a homeowner.

Can I claim input tax credits on a vehicle used for cleaning work?

Yes, where the vehicle is used for business. The GST/HST on the purchase or lease, fuel and maintenance is claimable. Keep a mileage log.

What happens if I miss a payroll remittance deadline?

The CRA charges interest plus a penalty of 3% of the amount owing, rising to 5% for repeated failures. Instalment privileges can also be withdrawn.

How long do I keep cleaning business records?

Six years from the end of the tax year they relate to. File late and the clock runs from the filing date instead.