Page 18 - April 2024 INSIGHT MAGAZINE.indd

ADVERTORIAL

Self-Employed Tax Filing (FAQs) of the home that is being used for business purposes. You can
Self-employed entrepreneurs thrive in their independence and also deduct expenses such as your computer, printer, furniture/
self-starting success, but the uncertainty attached to filing your fixtures, software and any other related expenses.
self-employed tax return for the first time can be stressful. Racolta How do I remit HST?
Jensen LLP is here to boost your confidence. We’ve compiled a If your gross sales to customers is greater than $30,000 over 4
list of frequently asked questions with answers about taxes from
consecutive quarters (or a year), then you have to register and
the sole proprietor point of view.
collect HST. You can remit it quarterly or yearly. Regardless
When do I need to file my taxes? which option you choose, it is considered prudent to set the HST
collected money aside (maybe use a savings account or a TFSA)
If your business is owned as a sole proprietorship (in other words
so that when HST comes due, it is there to be paid and you are not
you are not incorporated), it will run based on the calendar year scrambling to find the funds to pay CRA.
(from January 1st to December 31st). Taxes must be filed by June
15th of the following year (although if you owe taxes, make sure How long do I have to hold on to documentation?
to pay them in full by April 30th to avoid being charged interest by Your tax receipts/invoices/documents should be held on to for at
the CRA). least 6 years for audit purposes. There is no harm in holding them
longer (indefinitely), especially if you want to see how far you’ve
What information do I need to include? come along since the very beginning!!
As a self-employed individual/business, you will need to prepare What is the likelihood CRA will request an audit?
Schedule T2125 (Statement of Business or Professional Activities).
On this schedule, you will report your income/earnings, as well as You have as much chance of being audited being self-employed
your business expenses. These can be tracked using different as you do filing personal taxes, which is to say you just never
accounting software such as QuickBooks, Sage 50 (Simply know. This is why it’s a good idea to hire an accountant to ensure
you’re submitting and tracking documentation properly every step
Accounting), Wave, Excel, etc., just to name a few.
of the way. Should an audit request arise you’ve already got your
What about write-offs (expenses)? completed file at hand and your accountant can also assist you
You should be keeping receipts/invoices for all business expenses with dealing with CRA and the audit agent.
for yourself, your accountant and CRA (in case of audit, CRA will Should I incorporate my business?
ask for specific receipts, along with proof of payment such as your
It depends…it is not a “one size fits all” kind of situation. You will
credit card statement). The types of expenses you can deduct is
need to consider several factors such as the profitability of the
based on the nature of your business (they can be very specific, or
general). Some of the more general expenses can include vehicle business, the reason for incorporating (tax rates, liability, etc.) and
maintenance and fuel, office expenses and supplies, advertising/ if it makes sense to do so in your situation. Hiring an accountant
can definitely answer any questions you may have and provide
promotion/website/social media, cell phone, computer, meals/
you with guidance on whether you should remain as a sole-
entertainment (taking clients out), and legal/accounting fees.
proprietor or incorporate your business.
What about my home office?
If you operate out of your home (and have a dedicated space/
room that you use solely for the business), then you are eligible Racolta Jensen LLP is a full-service accounting firm in Cambridge,
Ontario dedicated to assisting self-employed and small to medium-sized
to claim a percentage of your home expenses. This includes
businesses navigate tax season successfully. Whether you’re gearing up
mortgage interest (or rent), property taxes, insurance, utilities, for the April 30th deadline or could use professional advice, call us at
and telephone/internet). You cannot deduct 100% of these (519) 622-1485 or visit our website at www.rjllp.ca
expenses but can deduct a percentage based on square footage

Lucci Racolta is a Chartered Professional Accountant, Licensed Public Accountant
and Partner at Racolta Jensen LLP. He draws on his experience to deliver public
accounting services in assurance, tax, and business advisory to small-medium sized
enterprises with a focus on excellent client service.

47 Dickson Street, Cambridge, (519) 622-1485
general@rjllp.ca | www.rjllp.ca

18 Spring 2024 www.cambridgechamber.com