6 worked Sole Proprietor Bookkeeping case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to sole proprietor bookkeeping work, not a specific client's file.
Case Study 1 · CRA review defended
$70,000 Reassessment Reduced To Nil On Review — Retiring Partner, London
Client: A retiring partner leaving a professional partnership · Where: London, Ontario · Engagement: 5 weeks, fixed fee
Reassessment reduced toNil
Tax protected$70,000
Prior filingsUndisturbed
The situation — A retiring partner leaving a professional partnership, London, Ontario
A review notice arrived at a retiring partner leaving a professional partnership in London, Ontario, covering sole proprietor bookkeeping for two tax years. The auditor's working position was an adjustment of $70,000. It was driven by partner draws that had pushed one partner’s adjusted cost base negative.
What we did for A retiring partner leaving a professional partnership, London, Ontario
Rather than negotiate, we rebuilt the record. We restructured the draw policy so no partner’s adjusted cost base went negative again, and reported the deemed gain correctly for the year it arose. We then submitted a point-by-point response that answered each proposed adjustment with the document behind it.
The result — A retiring partner leaving a professional partnership, London, Ontario
The auditor accepted the documented position and closed the review without adjustment, protecting $70,000 and leaving the prior filings undisturbed.
Case Study 2 · Backlog brought current
Collections Halted And $90,000 Cut From A 4-Year Backlog — Freelance Developer, Lethbridge
Client: A freelance developer · Where: Lethbridge, Alberta · Engagement: 3 weeks, fixed fee
Balance reduced by$90,000
Backlog cleared4 years
CollectionsHalted
The situation — A freelance developer, Lethbridge, Alberta
By the time a freelance developer in Lethbridge, Alberta called, 4 years were outstanding. The CRA had assessed on estimates. Underneath it sat an incorporation completed without the section 85 election, triggering an unnecessary gain.
What we did for A freelance developer, Lethbridge, Alberta
We reconstructed the records year by year. We drafted the allocation, admission and withdrawal terms into a written agreement before the next partner was admitted. Each filing replaced an arbitrary assessment with a real one.
The result — A freelance developer, Lethbridge, Alberta
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $90,000, and a relief application addressed part of the accumulated interest.
Case Study 3 · Deadline rescue
Filed On Time From A Standing Start, $41,000 Penalty Avoided — Three-Partner Medical Clinic, Burnaby
Client: A three-partner medical clinic · Where: Burnaby, British Columbia · Engagement: 5 weeks, fixed fee
Penalty avoided$41,000
Turnaround5 weeks
FiledOn time
The situation — A three-partner medical clinic, Burnaby, British Columbia
A three-partner medical clinic in Burnaby, British Columbia came to us 5 weeks before its filing deadline. The file came with three partners operating on a handshake, with no written agreement covering allocations or a departure. A late filing would have triggered a penalty of roughly $41,000 before interest.
What we did for A three-partner medical clinic, Burnaby, British Columbia
We worked backwards from the deadline. We filed the section 85 election with correct elected amounts and rolled the assets in without a taxable disposition. We prioritised the items that actually gated the filing and deferred everything that did not.
The result — A three-partner medical clinic, Burnaby, British Columbia
The return was filed on time and complete. The $41,000 penalty never arose, and the compliance calendar we set means the next deadline is scheduled rather than discovered.
Case Study 4 · Planning that cut the bill
$41,000 Saved By Correcting What Prior Filings Had Missed — Family-Staffed Proprietorship, Toronto
Client: A proprietor whose spouse works in the business · Where: Toronto, Ontario · Engagement: 3 weeks, fixed fee
Saving identified$41,000
RecurringYes
Positions documentedAll
The situation — A proprietor whose spouse works in the business, Toronto, Ontario
A proprietor whose spouse works in the business in Toronto, Ontario asked for a second opinion on sole proprietor bookkeeping. That followed three years of rising tax. The review found a profit split applied in practice that the written agreement did not support.
What we did for A proprietor whose spouse works in the business, Toronto, Ontario
We built the comparison first: current structure against two alternatives. Then we filed the outstanding T5013 returns with full partner allocations and requested penalty relief on the basis of the first-time nature of the failure.
The result — A proprietor whose spouse works in the business, Toronto, Ontario
First-year saving of $41,000, with the same benefit recurring. Every position taken is documented and supported in the file.
Case Study 5 · Missed incentive claimed
$133,000 Credit Claim Filed And Accepted Without Adjustment — Food-Truck Proprietorship, Brampton
Client: A food-truck sole proprietorship · Where: Brampton, Ontario · Engagement: 4 weeks, fixed fee
Claim value$133,000
AcceptedWithout adjustment
RepeatableAnnually
The situation — A food-truck sole proprietorship, Brampton, Ontario
A food-truck sole proprietorship in Brampton, Ontario assumed the credits did not apply to a business its size. Partner draws that had pushed one partner’s adjusted cost base negative meant they had applied all along.
What we did for A food-truck sole proprietorship, Brampton, Ontario
We identified the qualifying activity and built the documentation to support it. Then we kept the proprietorship on a December 31 fiscal period and moved the year-end question into the incorporation plan where it could actually be answered.
The result — A food-truck sole proprietorship, Brampton, Ontario
$133,000 recovered. Because the eligibility analysis is on file, the same claim can be repeated each year with a fraction of the effort.
Case Study 6 · Structure rebuilt
Corporate Structure Rebuilt For $45,000 Of Annual Savings — Unincorporated Trades Business, Calgary
Client: An unincorporated trades business · Where: Calgary, Alberta · Engagement: 8 weeks, fixed fee
Saving per year$45,000
DocumentationComplete
Transfer basisRollover
The situation — An unincorporated trades business, Calgary, Alberta
The structure at an unincorporated trades business in Calgary, Alberta dated from years earlier. It had been set up for a business that no longer existed. A partnership that crossed the T5013 threshold two years before anyone noticed had become expensive.
What we did for An unincorporated trades business, Calgary, Alberta
We rewrote the partnership allocation to match how the practice actually operated, effective for the following fiscal year. The reorganisation used the rollover provisions rather than a taxable transfer, so no tax fell due on the restructuring itself.
The result — An unincorporated trades business, Calgary, Alberta
$45,000 of annual saving, achieved on a tax-deferred basis. The minute book, elections and valuations are all in the file.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
