Great news for all Self-Employed Individuals!
The deadline for self-employed individuals this year is June 16th as the usual deadline date (June 15th) for Self-Employed individuals falls on a Sunday this year; so you’ll get an extra day to compile your records and receipts for the Canada Revenue Agency (CRA).
However if you owe money to the Canada Revenue Agency, then you will still be paying interest from May 5th onward, but will avoid any late filing penalties by filing by the June 16th deadline.
Self Employed Incorporated
If you’re self employed unincorporated, you should claim your reasonable business expenses by filling out a T2125 form.
Remember the CRA always needs actual receipts, no monthly credit card bills when you’re filing. When you’re not sure what expenses can be included in the T2125 form, always check with the CRA.
If you use your vehicle a lot for business, make sure you keep a log book and detail your business and personal use, noting the purposes of each kilometre. The golden rule for expenses with vehicle usage is to record every detail.
If you have a home office be sure to appropriate a reasonable amount for business space. The most common percentage to use is around 10%.
Remember that recently the government has let self-employed Canadians be eligible to opt into the EI (Employment Insurance) program. And also remember you will pay both ends, employer and employee portions of the CPP (Canada Pension Plan) if earning more than $3,500.
If you had a loss in 2013, you should still fill out the T2125 form. By filling out a T2125 form when you had a loss in 2013 shows that you are an active business and some of the loss can offset employment income.
Not many businesses can turn a profit in the first year of their existence so showing a profit in your first year of operation is not expected. However you need to have a reasonable expectation to obtain a profit in future years as using the losses in a business to obtain some type of write off is something the CRA doesn’t like.
If you are an incorporated business then you don’t fill out a T2125, you instead must fill out a T2 return.
You can declare your tax year on your first T2 return after incorporation.
Make sure the financial statements you attach to the return match the tax year of the return. On your first T2 return after incorporation, use the date of incorporation as the tax year start.
Your year end can be any date in the year of incorporation. For all subsequent returns, your tax year start will be the day after your tax year-end.
File your return no later than six months after the end of each tax year. When the corporation’s tax year ends on the last day of a month, file the return by the last day of the sixth month after the end of the tax year.
When the last day of the tax year is not the last day of a month, file the return by the same day of the sixth month after the end of the tax year.
Although you get an extra day to file in 2014, that doesn’t mean you should wait till the last minute.
Email us at email@example.com or call us at 1.877.SOFTRON and let us help get your money now!