If you are a sole proprietor and you are injured or hospitalized, the business does not pause just because you do. GST/HST remittances still fall due, invoices still need collecting, and any crew still needs managing or standing down. A sole proprietorship has no legal existence apart from you, so there is no one automatically in charge. The three practical protections every solo tradesperson should put in place are: a power of attorney so someone can act for you, EI Special Benefits registered in advance, and a cash reserve to cover fixed costs.
Why a sole prop is exposed
A corporation continues to exist on its own if its owner is incapacitated. A sole proprietorship does not. The obligations carry on regardless: the CRA has no automatic hardship deferral for illness, so if you cannot meet a filing or payment deadline, you, or someone acting for you, must contact the CRA proactively. Returns still need filing, even nil ones, and payroll remittances, if you have employees, are trust funds the CRA treats very seriously.
A power of attorney for property
A Power of Attorney for Property, called an Enduring or Continuing Power of Attorney in most provinces, lets you name a trusted person to manage your financial and business affairs if you become incapable. There is a critical detail: the document must say explicitly that it survives loss of mental capacity. Without that wording, the authority ends at the very moment you need it most. Have a lawyer in your province draft it correctly, and choose someone who actually understands your business.
EI Special Benefits for the self-employed
Self-employed Canadians can opt in to EI Special Benefits, which include sickness benefits of up to 26 weeks at 55% of insurable earnings, to a maximum of $729 per week in 2026. The catch is that you must register in advance and wait before you can claim. How it works:
- Register with Service Canada through your My Service Canada Account at any time while you are actively self-employed.
- Wait 12 months from your registration date before you can make a claim.
- Pay premiums annually through your T1 return at $1.63 per $100 of net self-employment income, to a 2026 maximum of $1,123.07 (in Quebec, $1.30 per $100, to a maximum of $895.70).
- To claim, you must show that the time you devote to your business has dropped by more than 40%, provide a medical certificate, and have earned at least $9,254 in self-employment income in the previous year.
- You can cancel within 60 days of registering without owing any premiums.
EI sickness benefits replace some personal income for a limited time. They do not pay your overheads, suppliers or subcontractors, so they are a floor, not a full solution.
Other protections worth considering
Beyond the basics, talk to a licensed insurance broker about cover that fits a self-employed tradesperson:
- Individual disability insurance replaces a portion of your personal income if you cannot work. Premiums are usually a small percentage of your annual income.
- Business overhead expense (BOE) insurance pays your fixed business costs (rent, tools, insurance, vehicle) while you are disabled. It is designed for the self-employed, and pricing depends on your situation, so get a broker quote.
- Critical illness insurance pays a lump sum on diagnosis of a specified serious condition. Again, pricing is individual; ask a broker.
The practical minimum
For any tradesperson working alone, three steps cover the worst case:
- Register for EI Special Benefits as soon as you start, so the 12-month clock is already running if you ever need to claim.
- Put an enduring power of attorney in place, naming someone who knows your business.
- Keep a cash reserve of about three months of fixed costs, so the business can absorb a gap while you recover.
Common mistakes
- Assuming the business pauses when you do. The CRA deadlines and your client obligations carry on regardless.
- A power of attorney that dies with your capacity. Without the survival wording, it ends exactly when you need it.
- Leaving EI registration until you are sick. The 12-month waiting period means you cannot register and claim in the same crisis.
- Treating EI sickness benefits as full cover. They replace some personal income only; they do not pay your business overheads.
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