It’s that time of year again. Time to gather your paperwork and file your annual tax return. As a self-employed individual, the deadline for filing your return is June 15, but there’s a catch. If you owe taxes, your balance is still due by April 30. Interest charges are applied starting May 1. So let’s get started with 4last-minutetax tips for self-employed filers.
In addition to the “usual” tax documents like childcare receipts, tuition slips, etc. self-employed taxpayers also need all the info relating to their business. To make tax prep easier, gather everything you’ll need before you start including
- Personal info for yourself, your spouse and any dependants.
You’ll need Social Insurance Numbers, dates of birth, and other info such as net income figures to claim certain credits for your family.
- Non-business-related slips and receipts. If you have a “regular” job, find your T4. If you pay for childcare so you can work or run your business, have your receipts totalled for the year.Medical expenses are another often-overlooked expense. Contact your pharmacy, dentist’s office, or other health-care provider and ask for an annual statement for last year’s expenses for your whole family.
- Last year’s return. There’s no better guide to this year’s taxes than last year’s return.
- Business-related information. Gather your income amounts. Tally up your expenses by category.
- If you’ve prepaid your taxes via instalments, you’ll need those figures as well.
- If you’re a GST/HST registrant, have your Business Number on hand and a copy of your GST/HST return.
*Tip – prepare your GST/HST return before your tax return. You’ll need figures from the GST/HST return to prepare your tax return.
Know what you can claim.
This one is especially important for first-time filers. Basically,any reasonable expense related to your business is a deduction at tax time. The full list of eligible business expenses is available on the Canada Revenue Agency’s webpage.
And don’t skip the little expenses like office supplies and bank fees. These costs add up! It’s important to include these amounts for two reasons. First, every expense you have reduces your business’s taxable income and reduces the amount of Canada Pension Plan contributions you’ll pay (As a self-employed taxpayer, you’re responsible for both the employer’s and employee’s share of CPP). Second, including every single expense gives you the most accurate picture of your business’s health. Once you have added up all of your operating expenses and income, you’ll know how profitable your business reallywas last year.
Use technology to your advantage.
Today technology has made tax-time easier than ever before. If you’re a CRA My Account holder, loads of your tax info can be imported directly from CRA to your tax return with just a few clicks. CRA’s Autofill My Return service can download everything from T slips to RRSP contributions – directly from your CRA My Account to the proper spots in your return. Carried forward amounts like losses from previous years, unused tuition credits and even unused RRSP amounts are just a click away. Learn more about Autofill My Return here.
For extra help preparing your return, choose TurboTax Self-Employed. The step-by-step instruction and additional guidance in the business section makes TurboTax SE a must-have for entrepreneurs. And, if you used TurboTax last year to prepare your return, you can easily import much of your tax info into this year’s return. Everything from your personaldetails (such as your address & date of birth) to your business details (like Capital Cost Allowance balances). Check out the full list of imported info here.
If you can’t pay, file anyway.
If you’re newly self-employed, you may not have anticipated owing taxes. As an employee, income tax and CPP contributions are deductedfrom your weekly paycheque. Self-employed individuals don’t have that luxury. If you haven’t set aside enough money to pay your tax owing, you may be tempted just to putoff filing your return. If you owe a balance you can’t pay right away, file your return on time anyway. Yes you will be subject to interest, but you’ll avoid the late-filing penalties. And the penalties can be stiff, especially if you’re a chronic late-filer.