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Self-employed? Let the CRA Help You Make Sense of Your Income Tax Return!
March 10th, 2015
Thanks to the CRA for providing such helpful information. We know many of our WoW members are self-employed, and we can all use a little extra help come tax season!
Fresh out of culinary school, you spent years mentoring with some of the best pastry chefs in the country, mastering the science of bread making, the complexity of French pastry, and the art of cake decorating. Fast forward a few years and you’re standing in the storefront of your very own bakery. You have the basic ingredients for your small business, but do you know how to get the most yield from your income tax return?
You’ve splurged on top-of-the-line appliances and cookware to bring your dream kitchen to life. But as the invoices start pouring in, it’s clear that your credit card is working as hard as your beaters. The good news? You may be able to deduct these and any other reasonable expenses you paid to earn business income, leaving more money in your pocket to re-invest in your business.
Your day doesn’t end when the kitchen closes—you still have to tackle bookkeeping, order supplies, and check your email for custom orders when you get home. When you use part of your home for business, you can deduct part of your maintenance costs such as heat, home insurance, electricity, cleaning materials, and more. If you rent your home, you can deduct part of your rent and any expenses for your workspace. To find out more, go to www.cra.gc.ca/smallbusiness and select “Business expenses.”
Having complete and organized records is the recipe to a successful tax season. Make sure you record all income and expenses so that you don’t miss out on any tax-saving opportunities. Remember, you can only deduct business-related expenses from your business income, so keep your business and personal records separate. To learn more about keeping records, go to www.cra.gc.ca/records.
Not sure if you need a goods and services tax/harmonized sales tax (GST/HST) account? Go to www.cra.gc.ca/gsthst and complete a short questionnaire to see if you need to register for one. Even if you don’t have to, you may benefit from registering so you can claim input tax credits on the GST/HST paid on your business purchases and expenses. In Quebec, Revenu Québec administers the GST/QST. If your business is located in Quebec, go to www.revenuquebec.ca.
The deadline to file an income tax and benefit return for self-employed individuals and their spouses is June 15, 2015. However, if you have a balance owing for 2014, you still have to pay it on or before April 30, 2015.
Filing electronically with NETFILE is easy, secure, and allows the Canada Revenue Agency (CRA) to process your return much faster. And if you’re entitled to a refund, you can enjoy your money in as little as eight business days, by combining online filing with direct deposit. For a list of software and web applications, including some that are free, go to www.netfile.gc.ca/software.
If you have tax owing, or have to pay tax by instalment, take advantage of pre-authorized debit (PAD) to set up your payments in advance. To learn more about your payment options, go to www.cra.gc.ca/payments.
You rely on your kitchen timer to remind you when your pastries are baked to perfection, but what about receiving friendly reminders of your tax deadlines? With the new CRA Business Tax Reminders app, available free of charge on Apple iOS, Google Android, and Blackberry mobile platforms, you won’t miss an important date again. Like your kitchen timer, the app lets you create reminders and alerts for key CRA due dates for things such as instalment payments, returns, remittances, and other tax-related business matters, so you won’t get burned by penalties and interest. With all these services available online (and on your mobile!), it’s easy to stay on top of your tax affairs year-round.
You can also stay up-to-date by receiving your notice of assessment online! Register for online mail through the CRA’s My Account or My Business Account service available at www.cra.gc.ca/electronicservices.
The CRA has dedicated part of its website to small businesses and tax scenarios that may affect them. Go to www.cra.gc.ca/smallbusiness to find out everything you need to know about your tax obligations as a small business owner—from reporting your income and expenses, to registering for GST/HST and payroll accounts. The CRA also has a series of videos for small businesses at www.cra.gc.ca/videogallery. If you’ve gone through the website and still need help, you can call 1-800-959-5525 to speak with a CRA agent.
And don’t miss the latest CRA news or tax tips—follow the CRA on Twitter: @CanRevAgency