The first half of the year is full of deadlines, from RRSP contributions to taxes.
And here’s another one: the deadline for the self-employed to file a tax return is June 15. This confuses many new self-employed individuals because you still must pay tax owing by the same date as everyone else – this year it was May 2. But you have an additional six weeks to get your return into the Canada Revenue Agency.
If you are thinking about striking out on your own or you are a self-employed newbie here are five common questions fielded by H&R Block about business taxes.
1. Do I need a business number?
You don’t need a number or even to be registered as a business. But you do need to fill out a T2125 Form which details your business income and expenses as part of your personal return. Even students who run a business in the summer can use this form. Don’t make the common mistake of listing self-employed income on line 104 (other income.)
2. What about CPP premiums?
If you earned more than $3,500, you will have to pay.
3. Do I need to register for HSTGST?
Those earning more than $30,000 must register for a GST/HST number. But it is a good idea anyway because you can claim input tax credits for the GST/HST you pay.
4. What happens if I declare a loss?
Losses can be carried forward to future years to reduce the tax load when your income is higher.
5. Do I need receipts?
Oh you betcha! Keep everything related to your expenses in separate files for each category. Don’t forget that the expenses must be incurred in order to earn an income. If you are using your car for business, maintain a mileage log. This can be a bit of a pain but after one base year of log-keeping, you can move to the new simplified method which uses the base year percentages.
