Accountant for Sherbrooke businesses

Builders first, then shops

Sherbrooke, Quebec's sixth largest city, had 172,950 people in 2021, up 7.2% in five years. Statistics Canada's latest count found 5,090 businesses with employees there, led by construction (679) and retail (660).

Quebec's small business rate is 2.2% for tax years that begin after April 29, 2026 (3.2% for a year that began earlier), but it comes with a condition no other province imposes: the corporation's employees must have been paid for at least 5,500 hours in the year or the year before. A corporation with more than 25% of its activities in the primary or manufacturing sectors can qualify on that share instead, in full at 50%. The deduction also needs a Canadian controlled private corporation with paid up capital of $10 million or less and adjusted aggregate investment income of $50,000 or less. A small contracting company with only a few employees can fall short and pay the general rate on all of its income. HBT has no Quebec office and works on these files remotely.

Sherbrooke in numbers

Source: Statistics Canada: Population and dwelling counts, census subdivisions, 2021 Census and Statistics Canada: Canadian Business Counts, with employees, June 2026.

What a Sherbrooke engagement covers

Why might a Sherbrooke contractor's corporation miss Quebec's small business rate?

Because of the paid hours test. Quebec gives the full small business deduction only to a corporation whose employees were paid for at least 5,500 hours in the year or the year before; it shrinks below that and disappears at 5,000 hours. A corporation can also qualify through the primary and manufacturing sectors: the deduction starts above 25% of its activities and is full at 50%. Without the deduction, the first $500,000 of business income is taxed at 20.5% combined instead of 11.2% for a tax year that begins after April 29, 2026.