Canada’s construction industry is projected to grow steadily over the forecast period from 2022 to 2026, and this growth is expected to persist for an extended period. Consequently, there will be more job opportunities for skilled trade workers, including subcontractors, in the coming years.

You’ll learn exactly how to become a subcontractor in Canada, covering everything from start to finish. Whether you’re a tradesperson ready to strike out on your own or an explorer of subcontracting opportunities, this article will give you the clarity, tools, and confidence to launch your subcontracting business the right way.

How to Become a Subcontractor in Canada

Here are legal requirements to start as a subcontractor in Canada.

1. Gain Skills, Certifications & Training

Being a qualified subcontractor goes beyond knowing your trade. Many fields require formal certifications such as the Red Seal (nationally recognized in Canada), particularly in construction and skilled trades.

Training in health and safety is equally essential. Courses like WHMIS, working at heights, and fall protection are often legally required and build trust with contractors and clients alike.

You will also need soft skills: clear communication, time management, negotiation, and customer service. These help you manage clients, clarify expectations, and resolve disputes efficiently.

Lastly, consider building basic business literacy. Understanding how to write invoices, manage cash flow, and handle taxes is crucial for long-term success.

Choose Between Sole Proprietorship and Incorporation

Your business structure determines how you are taxed and how much personal risk you assume.

A sole proprietorship is simple to establish and ideal for solo entrepreneurs just starting. However, it doesn’t separate personal and business liabilities.

Incorporation, on the other hand, protects personal assets and may offer tax advantages such as income splitting and corporate deductions. You can retain profits in the business and pay yourself a salary or dividends. However, incorporation brings ongoing obligations such as filings, accounting, and associated costs.

Think long-term. If you plan to scale your subcontracting work into a whole business or agency, incorporation could be the right move.

Register Your Business

You will need to register your business, either provincially or federally (depending on scope). Some trades also require licenses or trade permits, especially in construction or regulated services.

If your revenue exceeds the small‑supplier threshold (typically CA$30,000 over the last 4 quarters), you will need to register for GST/HST.

Some cities or municipalities require local business licenses, building permits, or trade-specific permits before you can legally operate.

Many contractors or clients will require proof of liability insurance before awarding you work.

Especially for construction, you may need to comply with workplace safety regulations and undergo training (e.g., WHMIS, OHS) depending on your province.

Obtain a Business Number and Set Your Rates

As a business entity, you require to obtain a Business Number (BN) from the Canada Revenue Agncy (CRA). 

Determining the appropriate charge is one of the most challenging aspects of subcontracting. Begin by researching the going rates in your trade and region. Rates can be hourly or project-based, depending on scope and client expectations.

Be transparent with your pricing. Include labor, materials, contingencies, and overhead. Clearly outline what’s included in the quote and what isn’t.

Contracts are essential. Spell out deliverables, deadlines, and payment terms. Many subcontractors require a deposit (10–30%) to begin work, with the remainder tied to milestones.

To stay on top of finances, utilize invoicing software and consistently include payment terms (e.g., Net 30) on invoices. Enforce late penalties if needed, and document every transaction for tax and legal protection.

Settle Taxes and Write-Offs

As a subcontractor, you are responsible for your own taxes and maintaining accurate financial records. Understanding allowable deductions and obligations will save you money and legal trouble.

Report your business income using forms like T2125 (Statement of Business or Professional Activities). If your net tax owing is beyond a certain threshold, you may need to pay quarterly installments of income tax.

As a self-employed person, you pay both the employer and employee portions. If registered, you are required to collect, report, and remit GST/HST on taxable supplies.

Maintain accurate records of receipts, invoices, and logs to ensure transparency and accountability. Use accounting software or a professional bookkeeper.

Build a Personal Brand as a Subcontractor

Your personal brand sets you apart from the competition. Start with a simple, professional website that showcases your work, qualifications, and contact information.

Optimize your Google Business Profile and collect positive reviews. Future clients are more likely to hire you if they can see past projects and read real testimonials.

Consistency in branding – logos, uniforms, vehicle decals helps you look established and trustworthy. Even simple touches, such as a branded invoice template or email signature, build credibility.

Specializing also boosts visibility. If you focus on a niche (e.g., smart home wiring, eco-renovations), you’ll stand out and become the go-to expert in that space.

What to Avoid as a New Subcontractor

• Not registering properly or delaying permits
• Undercharging or bidding too aggressively low
• Verbal agreements without written contracts
• Ignoring tax obligations until the year-end
• Poor cash flow management
• Overextending by taking too many concurrent projects
• Failing to define the scope and deliverables clearly
• Skipping insurance or safety compliance

Wrap Up

Becoming a subcontractor in Canada is both rewarding and demanding. You will gain independence, income potential, and flexibility—but also take on legal, financial, and operational responsibilities.

Register your business, understand your tax obligations, and build the proper skill set. From there, focus on finding clients, setting smart rates, and creating a trustworthy brand.

Treat your subcontracting business like the business it is from day one. With the right mindset and structure, it can become a sustainable and scalable career path.