Filing Self-Employed Taxes in Canada: Your Guide to CPP, EI, HST & Income Tax
We encourage you to register for a CRA account before filing your return, and have all of your tax information for filing your return on hand. If you are self-employed, or your spouse or common-law partner is self-employed, you have until June 15, 2025, to file your 2024 income tax and benefit return. Since June 15 falls on a Sunday, your return will be considered on time if the CRA receives it by June 16, 2025. If you are in Québec, check the Revenu Québec’s website to know more about filing your income tax return by mail. Self-employed persons living in Québec will have a different form and filing system from their other provincial counterparts.
Know what information you need to track and report
For an expense to be deductible, it must be directly related to your business operations. If an expense has both a personal and a business component (like your cell phone bill), you can only deduct the portion related to your business use. We will cover a comprehensive list of these deductions in the next section. For now, understand that every dollar you spend on a legitimate business expense reduces your taxable income by that same dollar amount.
Whether you’re a freelancer, side-gigger, independent contractor, or have multiple sources of income, TurboTax can handle your return. If your services are rendered to a non-resident, it’s also generally zero-rated, meaning you don’t need to collect GST/HST even if you’re a GST/HST registrant. You’re liable to income tax on any money you earn from client’s outside of Canada. As a Canadian freelancer, you’re taxed based on where you reside — not where the client resides.
Self-Employed Tax Forms Canada
You can be an employee and an independent contractor (i.e. self-employed) at the same time. It’s very common to have more than one job, or do a side hustle along with your full-time employment. If you’re 25 or younger, you can file with unlimited tax expert help for just $20 per return (that’s a discount of up to $120). Are you a small business owner, independent contractor, freelancer, or have a side hustle?
- For more information on changes to your business, go to Changes to your business and CRA program accounts.
- As an self-employed in Canada, you need to know how much to set aside for your taxes, especially for the Canada Pension Plan (CPP) and Employment Insurance (EI) premiums.
- This is a value-added sales tax that applies to most goods and services in Canada.
- Use the Payment Arrangement Calculator in your CRA account to set up a plan that works for you.
- Working with diverse industry specialists and self-employed individuals, we have gained unmatchable experience that is constantly helping our clients.
Maximize Your Refund and Simplify Tax Season Today
This category covers the everyday items you need to run your business. Also remember that being self-employed and being an employee are not mutually exclusive. You can both work for yourself and work for someone else during the same tax year. If you’ve been self-employed for a while, have a new side job, or have just made the jump from employee to self-employed, your tax situation is probably unique. Treat the value of the inventory as a purchase of goods for resale and include it in the calculation of cost of goods sold in your income statement at the end of the year. Determine the fair market value of transferred assets, and the implications of acquiring an existing business.
Self-employed tax filing made easy
Whether you drive a car to meet clients or work from a home office, you can claim a portion of those expenses when filing your tax return–this will also reduce the taxes you owe. If you do contract work for a large company, they may issue you a T4A slip, which reports the amount they paid you directly to the CRA. Payment processors like Stripe, Square, and PayPal are filing taxes as a self employed canadian also required to report account activity to tax authorities.
- Everything from office supplies to vehicle costs can be written off, providing the expense is related to your business, you have the supporting documentation and the expense is reasonable.
- Understanding this distinction is the first step toward clarity.
- Familiarize yourself with potential deductions to reduce taxable income.
- Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.
- If you’re carrying on some form of business activity, report it—even if you’re not profitable yet.
Staying organized during tax season is essential for avoiding penalties and last-minute rushing —ensuring some financial peace of mind. Always keep accurate records of your earnings to ensure correct reporting when filing taxes. Utilize bookkeeping software to track your income and expenses efficiently. Freelancers and independent contractors in Canada need to manage their taxes effectively to ensure compliance. Self-employed individuals must report all income earned from their business activities, including payments received from various clients.
CloudTax adheres to industry-leading privacy and security standards. Your tax data is encrypted on our secure servers, and your password serves as the key. We only share your information with the CRA, and only if you choose to submit via NETFILE through CloudTax. The Underused Housing Tax (UHT) is a 1% tax charged on the value of all Canadian residential property that is considered to be vacant or underused. To provide you with the attention you deserve, if you wish to have an in-person meeting, we kindly request appointments to be booked in advance.
Consider Quarterly Tax Payments
When you begin trading goods or services for money without an employer, the Canadian federal government considers you self-employed. That is the moment where you are required to report all your income and file your taxes with CRA. The income will be reported as part of your personal income on your Personal Tax Return (T1). All personal tax returns and payments must be received or postmarked by the deadline, and e-submissions must be submitted before midnight local time on the day they are due. As an independent contractor, you can deduct various business expenses, such as home office costs and equipment purchases.
Know the Rules on How Long to Keep Tax Records in Canada
You have saved me time in having to build one on my own.Thank you again for allowing me and everyone else who uses this template to utilize your abilities at excel design. We will not provide legal advice or represent you before the CRA or Revenu Québec, or prepare or review your response to the CRA or Revenu Québec. More considerable expenses, like equipment, are classified under capital cost allowances (CCA). Depending on its category, these items have their costs expensed over several years.
If you are incorporated, this information does not apply to you.