I'm self employed, what are some tax tips?

When you are self-employed, it’s important to understand how you are taxed and what expenses are deductible. This infographic will give you some key tax tips so you can be prepared.

Tax Tips for the Self-Employed

Know what income is taxable

Taxable business income includes money earned from any activity you carry on with the intention to earn a profit.

This can include money from a profession, trade or manufacturing.

Make sure you save for taxes

Your tax owing will not be deducted from your income as it would be if you worked for a company.

It is suggested that you set aside 25 – 30% of your income.

Tip: Every time you earn income, put this amount in a separate bank account.

Understand and prepare for tax instalments

The CRA may decide that you will need to make quarterly tax instalments to cover your potential income tax. Count these towards what you are saving overall for taxes.

Instalment dates are March 15, June 15, Sept. 15 and Dec. 15 of each year.

Know what expenses are tax-deductible

As a self-employed person, you can deduct business-related expenses such as:

  • Home office
  • Cell phone
  • Bank fees
  • Office expenses
  • Inventory

For a full list of eligible expenses, visit the CRA website.

Keep records

It is important to keep records of all your deducted expenses and income for six years in case they are ever in question by the government.

Consult a professional

A bookkeeper or accountant is worth the investment as they will know about the exemptions, opportunities and tax advantages that you are not aware of.

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