Being self-employed in Canada means that you will pay a different tax rate everyone else. Knowing what you owe is key to staying up-to-date on your taxes.
When you are self-employed, you will have to pay a different tax rate than the rest of the population who are working for other companies or are not “self-employed.” Knowing what owe in taxes is key to ensuring that you are paying the taxes you owe on time each year. Staying in good standing with the Canada Revenue Agency (CRA) will help you avoid tax issues in the future as well as penalties and other fines that you may otherwise find yourself having to pay.
The tax brackets for the self-employed in Canada are as follows:
All Provinces except Quebec tax the self-employed in the same way.
There are some other items of note for individuals who are self-employed throughout Canada. Some of these notes include the following things that you should keep in mind when you are self-employed and filing your taxes in Canada:
Remembering these key points about taxes for the self-employed throughout Canada can help make sure that you pay what you owe the CRA each year, but that you are not getting charged more than you owe or withholding money that you do owe.
The self-employed are given all kinds of tax-breaks throughout Canada, which can save you a considerable amount of money when you are going to file your taxes. The following are a brief review of what expenses you can deduct from your taxes, even if you may not be aware of them:
Any expense related to running your business may get deducted from your taxable income including everything from startup costs to delivery or shipping costs for supplies or items you need to run your business are all deductible.
Any sorts of expenses you have to rent office space can get written off of your taxes. For a home office, if your office is “X” percent of the space in your home, you can divide that by the total size of your home and write that much of your home off of your business expense. For example, if you have a 2000 square meter home and a 200 square meter office, you can write 10% of your home costs off of your taxable income.
Anytime that you are taking either entertainment or meal-related expenses off of your taxes, you are allowed to deduct up to 50% of those costs if your entertainment/dining costs were business-related.
If you have any vehicles that are dedicated solely to your business you may write the cost of all of the vehicle’s insurance, maintenance, repairs, gas/fuel, etc. off of your taxes.
Even small stuff that might not seem like a big deal can add up when taking expenses off of your taxes. Items like parking fees or postage stamps may seem small, but they add up in the end and can save you a lot of money off of your taxes each year.
These are some of the lesser known business expenses that can get written off of your taxes and can help save you quite a bit of money in the process.
If you are a business owner and are not completely sure about how to go to about filing your taxes, seeking out help can be the best way to go. Filing as a business is more expensive than filing for your personal expenses. As a sole proprietor, you can expect to pay between $200-$500 depending on the complexity of your business. If you’re incorporated, you expect to pay between $800-$1800.