President, Intuit Canada.
Canada is embarking on an exciting and unprecedented time in our job market.
As technology continues to evolve and people find new ways to apply creative thinking and passions to income-generating models, our self-employed population is more significant than ever. More than three million Canadians are self-employed.
In fact, by the year 2020, 45 per cent of Canada's work force will be generating self-employed income, either entirely or through side gigs.
As we embark on tax season, a large percentage of Canadians will be filing as a self-employed person, many of them for the first time. This daunting process can be much less stressful if you know what to look for.
Last year, TD Bank released a study with Prosper Canada that found self-employed Canadians are among the most likely to experience income volatility in our country.
It goes without saying that the tax-filing process for this group can be extremely stressful, with immense pressure to ensure they do not miss anything and they maximize their return to its highest potential.
I know firsthand how daunting the tax-filing process can be for the self-employed. At the age of 12, I started my own business cutting other people's lawns. I continued that early entrepreneurial spirit with other business ideas in my teens. My father showed me how to do my taxes, but without his help, I would have been overwhelmed and afraid of making mistakes.
In my role now, I get to speak with many self-employed people who are at a loss when trying to figure out their finances and taxes.
While navigating the tax process can seem daunting to a self-employed person with many perceived complications, it is possible for self-employed Canadians to champion their tax process with the right information and a few simple tools.
Understand what makes the 2018 tax season unique
No two tax seasons are the same, and this is particularly true for our self-employed population. This year, the federal government has implemented some changes that are important to be aware of as a self-employed person.
GST/HST will now be on fares for Uber and other ride-sharing services. As the sharing economy continues to grow and be a significant component of the self-employed and gig economy, this is an essential change for many.
Be prepared and know what to look for
As a freelancer or independent contractor, year-round preparation for tax season is critical. As a general rule, you should reserve 25 per cent of this income for taxes to avoid added anxiety when it's time to file.
When filing, look for line 104 indicating "information not on a T4 slip" – this one's for you. Also, you'll likely need to fill out the T2125 form, which will cover your income and expenses.
Make the most of your business investments
It's important to understand the expenses related to your business that you can deduct to maximize your return. But here's a key factor many aren't aware of, especially when you are starting out: You must keep records of everything you plan to claim here.
Mileage, supplies, phone and internet expenses, and bad debts are among the many things you have the opportunity to claim, but only if you have the paperwork to back it up.
Using an online or mobile accounting software makes it simple to maintain your books, so you're not scrambling to find receipts and statements weeks before the deadline. Again, the key here is preparing year-round to avoid costly surprises.
Take advantage of tech
When it comes to taxes, technology has evolved to provide increasingly customized experiences.
One of the biggest anxiety-causing misconceptions among self-employed Canadians is that their tax situation is entirely unlike anyone else's and they are ultimately alone in their specific worries or process.
While self-employed Canadians certainly face extraordinary challenges, they also have access to expertise and guidance from the comfort of home to fit their busy schedules.
In fact, self-employed Canadians can now access filing software tailored specifically for their needs, as well as live access to tax experts throughout their filing journey.
There should not be any guesswork when it comes to your taxes, regardless of your situation.
The self-employed journey is full of exciting opportunities, but it can also include a level of uncertainty. When it comes to taxes this year, this information will help take tax uncertainties off the table.
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