It really is quite nice to be your own boss and be able to call the shots as to how many hours you are going to work and when. If earning money is a responsibility that you have then you will find the world of self-employment does come with a lot of obligations. One of these will be your Canada tax accountability. You no doubt want to keep your expenses down, but one place you may want to invest some money in is finding a good tax accountant that is going to help you keep in good standing with the CRA.
It is critical that you implement good record keeping. You need a way to track your expenses and your income because you will need to provide this type of information to your accountant, who in turn will use it to prepare and file your Canadian tax return.
If you have no bookkeeping experience there is some good software available that can assist you with this. It will take some basic learning but will make life a lot easier for you and your accountant. It will also guide you as to how to claim your expenses without putting them all under the category of miscellaneous. One thing you do not want to do is draw attention to yourself through an improper tax filing. When the CRA sees a self-employed return that contains a miscellaneous column loaded with expenses without further explanation as to the actual category of these expenses it can draw the CRA’s attention to this and they may request more detailed information.
Another area of taxation that the Canada Revenue Agency tends to pay attention to when reviewing tax returns for the self-employed is their claims for a home office and the use of a vehicle. These are two areas that often get miss claimed and they could instigate a further review of your tax return.
That doesn’t mean that you are not allowed to claim your vehicle or home office, but there are specific rules and regulations regarding these. These are just two of the many reasons why you may want to make good use of a Toronto accountant who specializes in taxes at different business levels.
Something else to keep in mind is that while you are in a self-employed situation now, it may be that your business will reach a point where it needs to be registered as a sole proprietorship or even a Corporation. This is a big decision to make and being able to rely on the expertise of a Toronto accountant to help you make the right choice will be most valuable to you from a tax point of view as well as financially.
