Self-Employment Income
We provide self-employment tax services for individuals carrying on business in Canada. We assist self-employed individuals with reporting business income and deductible business expenses and prepare personal income tax returns based on their business activities.
Whether you are a freelancer, rideshare driver, food delivery driver, content creator, online seller, or operate any other business as a sole proprietor, we can assist with your tax filing.
The following are answers to some common questions about self-employment income.
What Is Self-Employment Income?
Business activities carried on in your own name are generally considered self-employment. Examples include coaching, consulting, tutoring, operating an online store, creating online content, driving for Uber, food delivery services, freelancing, and many other independent business activities.
I Only Have a Side Business. Is It Still Self-Employment?
Generally, yes. If you carry on a business in your own name and earn business income or commissions, the income is generally considered self-employment income, whether it is your primary source of income or a side business.
When filing your personal tax return, business income and expenses are reported separately on the appropriate business schedules.
How Is Self-Employment Income Taxed?
Self-employment tax is generally based on your net business income, not your total sales or revenue.
Net business income is calculated by deducting eligible business expenses from your business income. The resulting profit is reported as taxable income on your personal tax return.
What Business Expenses Can I Deduct?
Business expenses incurred to earn business income are generally deductible. Common examples include:
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Advertising
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Office supplies
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Telephone and internet expenses
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Business insurance
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Travel expenses
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Meals and entertainment (subject to CRA limits)
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Home office expenses
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Motor vehicle expenses
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Capital Cost Allowance (CCA)
The expenses you can claim depend on the nature of your business.
Do I Still Need to Report My Business If I Didn't Make a Profit?
Yes. Even if your business did not make a profit or incurred a loss, business income and expenses generally still need to be reported.
A business loss may also reduce other taxable income, depending on your circumstances.
Do I Have to Pay CPP Contributions?
If your net self-employment income exceeds $3,500, you are generally required to pay Canada Pension Plan (CPP) contributions on your self-employment earnings.
Unlike employees, self-employed individuals are responsible for both the employee and employer portions of CPP contributions.
Is Income Reported on a T4A Self-Employment Income?
Often, but not always.
If you receive a T4A for services you provided as an independent contractor or self-employed individual, the income is generally reported as self-employment income.
However, a T4A may also be issued for other types of payments, such as pensions, scholarships, research grants, or certain other amounts. Whether the income should be reported as self-employment depends on the nature of the payment.
Unlike employment income reported on a T4, tax is often not withheld from self-employment income reported on a T4A, so you may have tax owing when you file your return.
Do I Need to Register for GST/HST?
Generally, you must register for GST/HST if your taxable revenues exceed $30,000 over four consecutive calendar quarters.
If your revenues are below this threshold, you may still choose to register voluntarily.
What Records Should I Keep?
You should keep records of your business income and expenses, including invoices, receipts, bank statements, contracts, and other supporting documents.
In most cases, CRA requires records to be retained for at least six years. If CRA reviews your tax return, you may be asked to provide these records to support your claims.
Do I Need to Incorporate My Business?
Not necessarily.
Many people start their business as sole proprietors without incorporating. As a business grows and becomes consistently profitable, incorporation may be considered for business and tax planning purposes.
Can You Prepare My Self-Employment Tax Return?
Yes.
If you operate a sole proprietorship or earn self-employment income, we can assist with reporting your business income and expenses and preparing your personal income tax return based on your individual circumstances.