Being your own boss has its perks, but it also comes with additional responsibilities. Taxes, being one of them, can be particularly complicated and confusing when you’re self-employed. It’s wise to talk to a professional who can help you plan, organize, and submit your forms to avoid penalties from the CRA. If you’re in need of some financial advice, check out these tips to help you nail down your taxes when you’re self-employed.
To receive the most significant return from your taxes, you need to learn how to keep track of your money, and what you can and cannot deduct. Even if you have an accountant, it’s absolutely necessary to learn tax basics and to properly keep track of all your invoices, contracts and receipts so that you keep your personal and business accounts separate.
To give you an idea of the types of expenses that you can claim, we’ve listed some that the CRA permits: wages, start-up costs, interest on loans, insurance costs, advertising expenses, business meals and entertainment, office supplies and equipment, professional memberships, phone and internet costs, as well as courier fees to be expensed, just as long as it relates to work.
If you work from home, you can also claim a proportion of your deductions for your mortgage interest, property taxes, insurance and utility bills. When it comes to filing, even the smallest expenditures should be submitted as you may be able to get a deduction for some of it.
Check the CRA Guidelines
Under the CRA, you can deduct any reasonable current expense that you pay to earn business income. That means if you’re a freelance reporter who frequently appears on TV, you are eligible to write off your new suit, tie, and haircut, just as long as the expenses fit the guidelines. If you’re not sure what type of costs will be considered for your business sector, it’s important to talk to a business advisor or accountant who can help you figure it out in order to avoid penalties.
Don’t Forget About HST
If your gross revenue exceeds $30,000 a year, you need to pay HST. If you’re not there yet, you don’t have to file your HST return with your taxes. If you’re one of the lucky ones whose gross income is more than $1.5 million per year, you’ll need to talk to an accountant about the best ways to file your taxes.
File on Time
You don’t have to wait till the end of the year to pay taxes; you can file every month if you prefer. It’s a great way to avoid the monstrous tax bill that you can expect at the end of the year. All you need to do is create an online vendor account for the CRA through your online banking and pay according to your tax bracket. If you do decide to pay yearly, make sure you meet the June 15th deadline to submit your taxes. Otherwise, you could receive a late-filing penalty, adding more salt to your wounds.
Hire a Professional
To make sure you nail your taxes this year, it’s worth it to put your trust in a professional financial advisor. An expert knows all the ins and outs of the tax system, the new regulations, how to avoid penalties, and how to get you the best return possible. Making a costly mistake on your own or missing out on some line items could prevent you from getting the return you deserve
When you’re ready to speak to an advisor who can help you get the highest return for your business, contact our team at The Beacon Group of Assante Financial Management Ltd. Our team of highly trained wealth advisors can help your business get on the right track today and stay there well into the future.