If you’re new to the world of self-employment, preparing your first tax return may seem like a challenge. But, if you can handle being your own boss, you can easily handle your tax return. The key is being prepared. Let’s review what you need to have to file your self-employed tax return.
Most self-employed taxpayers still only file one return. (The exception is for small businesses that have been incorporated.) This means that you’ll still enter in all of the “usual” information such as childcare expenses, medical expenses, tuition, etc. but you’ll also include info about your self-employment activities. Think of it as another form not another return.
- Names and Social Insurance numbers for you, your spouse, and any dependants.
- Dates of birth for all of the above.
- Tax info such as T slips (from investments, “regular” jobs, etc.), tuition slips, RRSP contributions, moving expenses, etc. Whatever you would normally report outside of your self-employment activities.
The first section of the business section of your return (Yes! You are a business owner for tax purposes.) requires a few bits of info including
- The name and address of your “business”. If your business doesn’t have a formal name, that’s perfectly fine. Use your name and address as the business name.
- The industry code that fits your line of work. To learn more about choosing the right industry code, check out this article from TurboTax.
- Your GST/HST number, partnership number, or business identification number. If none of these apply to you, no worries. It’s not required to file your return.
This one is quite straight-forward. The money you earned from self-employment is your “business income”. Gather all of your invoices, banking info, whatever system you used to keep track of your income, such as QuickBooks or QuickBooks Self-Employed.
Depending upon your type of self-employment, your expenses could be a few bucks or thousands of dollars. Regardless of the amount of the expense, it’s important to claim all of your business-related expenses on your tax return. In addition to lowering your tax payable, you’re also putting together the most accurate picture of your business’s overall health. The most common expenses for self-employed taxpayers include
- Advertising – Receipts for business cards, flyers, online marketing, etc.
- Vehicle expenses – gas, repairs, maintenance, insurance, lease payments and registration fees may all be deductible if you use your vehicle for self-employment. It’s important to have the mileage figures you need on hand as well. For more information on claiming mileage, read our article.
- Bank fees are a commonly missed deduction. Remember that every penny counts at tax time! Dig out those bank statements before sitting down to prepare your return.
- Office supplies – pens, paper, etc. Tally up your totals for printer paper and ink cartridges too!
- Inventory – if you are a direct seller, the cost of your product is a deduction. And don’t forget those shipping charges! Review your inventory cost and write down the total for tax time.
- Business-use-of-home expenses. If you operate your business out of your home, you may be able to deduct a portion of your household expenses at tax time. This includes a portion of your rent and utilities. Gather your bills and receipts for power, heat, rent, etc.
- Cell phone – if you use your phone for business, a portion of that expense can be claimed as well. Have your cell phone bills on hand.
For the complete list of eligible business expenses, visit the Canada Revenue Agency’s webpage Business Expenses.
TurboTax Self-Employed is the only tax preparation software designed specifically to help self-employed individuals do their own taxes. It walks you through your taxes step-by-step, and helps you find all the deductions and credits you qualify for. And, with TurboTax Live Assist & Review for Self-Employed, a tax expert is there to answer your questions while you prepare your taxes. Then when you are done they will fully review your return to ensure it is fully accurate and you are getting your maximum refund.
References & Resources
- TurboTax: Your Income Tax Return and Supporting Documents
- TurboTax: What You Need to Start Your Tax Return
- CRA: Small businesses and self-employed income
Jennifer is the Social Care Manager for TurboTax Canada. When she’s not helping customers on Facebook, Twitter, and TurboTax’s community forum AnswerXchange, Jennifer is busy researching the latest tax changes.
Jennifer has been preparing tax returns for over 30 years and enjoys holding tax seminars for seniors in her hometown of St. Vincent’s, Newfoundland.