Many times individuals that are no longer an employee start up a small at home business for themselves and don’t realize that technically they now have become self employed. This puts them in an entirely different tax position.
You now have a whole gambit of potential business responsibilities that you are not familiar with. Even if your small business is not generating a profit you still need to file as a self employed individual, or if you have a partnership then your taxes have to be filed as such.
Perhaps you are a professional who is working from home. You may be a hair stylist, or you may be selling retail products by holding home parties or going to clients homes. These are all forms of business and the CRA identifies any activity where there is a reasonable expectation to make a profit as a business. So even if you don’t expect to make money this year, but should be in the future then you need to view yourself as a business owner and file your taxes accordingly.
Now being in this position you are legally required to keep proper records. This doesn’t mean just keeping all of your financial accounts in a file folder or mixing your personal financials with your business entity. It means keeping the records separate and conducting your business obligations as a separate entity. However, if you are not incorporated then the CRA views your self employment and you as one entity. Incorporated businesses are viewed as two separate entities. If keeping records is just not one of your strengths then consider using affordable bookkeeping services.
While this all may seem a little overwhelming for you there are other things that you will need to consider as well like the GST/HST, and your expenses. You will need to determine if you have included some of your assets into your business venture.
You will also need to include all of the pertinent details of your income and expenses when you file your taxes and there is a specific format that has to be followed for this. You can save yourself a lot of time and confusion by retaining us as your Toronto accountant to do this task for you. We are experts at small business tax filing and we would be pleased to offer our services to you which you will find quite affordable.
