Statement of business activities (Form T2125)

For a business run by its owner as a sole proprietorship, or with someone else as a partnership, the CRA says to calculate and report the business income using Form T2125; it points incorporated businesses to its pages for corporations. The older name, Statement of Business Activities, can appear in older documents.

What the form is

The CRA says T2125 combines two earlier forms, T2124, Statement of Business Activities, and T2032, Statement of Professional Activities. Someone with both business and professional income completes a separate form for each. The CRA’s instructions for the form cover an expenses section, and a capital cost allowance chart in which undepreciated capital cost is worked out after additions and dispositions. The CRA’s digital services page lists T1 (self-employed/sole proprietorship) and T2 (corporation) as separate filing options.

What to ask

• Which years of the form the seller can provide.
• Whether the income on the form matches the financial statements shown to you.
• Whether the business is a sole proprietorship, a partnership or a corporation, since that decides which return reports it.

See selling a business that was never incorporated and the entry on a sole proprietorship.