FROM THE SUCCESS PEOPLETM
Stop Fearing Self Employed Taxes! 5 Tax Tips for Freelancers in Alberta
Experts say 45% of Canadians will be self-employed in the next couple of years.
Around 47% of self-employed Canadians enjoy the flexibility that comes with owning a business and working on their own terms. Don’t let taxes spoil your experience: stay aware.
Learn how to do self-employed taxes so you can enjoy the true perks of business ownership. Here are 5 tips for doing your taxes when you’re freelancing in Alberta:
1. Self-Employed Taxes: Save Your Money
When you’re self-employed, you’re responsible for saving your tax money. If your income varies, it’s especially important to calculate how much taxes you owe.
Play it safe by saving 30% of your revenue. That way, you’ll always have money left over when it’s time to pay your taxes.
If you want a more approximate amount, use an Alberta tax calculator. Use your available financial resources to be smart about your money.
2. Collect Receipts
Keep all important receipts and invoices for at least 6 years. Receipts prove the items you bought are valid deductions. The CRA requires you to have a receipt for every deduction.
Write down every receipt’s purpose on the back of each receipt. Taking receipt notes helps you remember what the receipts are for.
If you can swing it, use a separate credit card or bank account for business transactions. This will help you keep track of your business expenses better.
3. Home Office Deduction
If you freelance from home, you qualify for a home office deduction. A home office deduction lets you claim a portion of household expenses as deductions.
The percentage you’ll deduct depends on the size of your office. For instance, if your home office takes up 20% of your home, you’ll be able to deduct 20% of your household expenses.
These household expenses include electricity, water, phone, property taxes, mortgage interest, and home insurance. Almost any resource you use during the course of your self-employment qualifies for a deduction.
4. Be Mindful of Deadlines
Meeting a deadline can make the difference between paying your taxes and getting fined.
Keep track of important dates that relate to your taxes on a calendar. For instance, January 31st is the deadline for quarterly tax payments. February 20th is the earliest you can file your taxes online.
June 15th is the deadline for full-time self-employed taxes in Canada. Don’t wait until the last minute to do your taxes. The earlier you pay your taxes, the better off you’ll be.
5. Pay Taxes More Frequently
When you pay your taxes on a quarterly or monthly basis, you avoid paying a large sum all at once. Both options are less stressful payment arrangements.
To set yourself up for monthly payments, you go to the CRA website and go to online banking. There, you set up the CRA as an online vendor.
Remember: Always put your tax money aside every month, especially if your income varies.
Keep Calm and Pay Your Taxes
Around 2.5 million Canadians are self-employed. Knowing how to do self-employed taxes is a skill every freelancer needs.
Around 15% of Canada’s population chooses self-employment. Fortunately, the benefits of self-employment outweigh the burden of paying taxes.
Get your taxes right by hiring a professional accountant. The results will amaze you.
Need an accountant who specializes in medical practices, oil and gas, small business and more?
Book your free 30-minute "Success Check" today.