Are you Self-Employed?

If you're working for yourself or are thinking about it, it's important to keep in mind that there may be tax ramifications you should consider. Additionally, there are other factors beyond taxes, such as mandatory contributions to the Canada Pension Plan (CPP), that will be included in your tax bill when you file your annual return.

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Starting a side business can provide you with extra income that you can save for emergencies, family vacations, outdoor spaces, or a new car. You can pursue your passions, be your own boss, and work on your own schedule when you start a side business. This is why it has become a popular way for people to earn additional income.

As a business owner, it's essential to maintain order and keep track of your finances. It's recommended that you store all documents in a single folder or file, organized by date, to simplify your life. You may also want to keep copies of your invoices and receipts for expenses related to your work. It's important to keep all documents for six years, as the CRA may request them for a detailed review at any time.

If you have a side business, you need to report any income earned on your T1 form, specifically on the Statement of Business or Professional Activities (document number 1). This form will include any income you receive from your business activities.

When you add your business income to your overall income, it is important to consider the tax implications. You might be concerned that your higher income will place you in a higher tax bracket, but there are "work related" expenses that can be deducted. Ma Tax Inc can help you determine which expenses are eligible for deduction on your business tax return.

If your self-employed income exceeds $30,000, you will need to register for a GST/HST number and charge your clients accordingly. It is recommended that you set aside 25% to 30% of your income to cover your tax obligations when tax time comes around. The Federal tax bracket for 2022 is outlined below.

The 2022 Federal tax bracket is noted below: It’s strongly recommended that you set aside 25% to 30% of your income to meet your tax obligations at tax time.

Contact Scarborough Accountant for Personal Tax Returns Services In Scarborough.

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15% on the first $50,197 of taxable icome, plus

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20.5% on the next $50,195 of taxable income (on the portion of taxable income over 50,197 up to $100,392), plus

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26% on the next $55,233 of taxable income (on the portion of taxable income over $100,392 up to $155,625), plus

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29% on the next $66,083 of taxable income (on the portion of taxable income over 155,625 up to $221,708), plus

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33% of taxable income over $221,708

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