You have been in business for a year and approaching your year end. What government forms will I need to complete?
As a self-employed person living and working in Canada, there are a number of tax return documents you will need to complete and submit to the Canada Revenue Agency each tax year.
But which self-employed tax forms in Canada apply to your situation?
First things first – Who can be self-employed?
Depending on the structure of your self-employed business, you will complete and file different tax returns. Typically, most individuals that work for themselves will structure their business as:
- A sole-proprietorship
- A partnership
- An non-corporation
The income earned from these structures is called self-employed income.
NOTE – If your business is incorporated – you are no longer considered self-employed. Instead, you are considered an employee of the Corporation.
The income earned as a Sole Proprietorship or Partnership, will pay income tax rate at your personal income tax bracket. As your business income may vary from year to year, so will your tax bracket.
Common Tax Forms used for Self – Employed (in Canada)
- T1 Return – your personal tax return
- Form T2125 – Statement of Business of Professional activities – This is your business income less business expenses.
- Form T4A – Individuals that work as Independent contractors or freelancers. – This is your self-employment slip.
- Form T5013 – Partnership Information Return
- Form GST34 – If you have a registered HST#, you will need to use this form to file your yearend return.
- CPP – anyone over 18years and earning an income must pay into CPP
To help you fill out these essential forms, you will need the corresponding business and financial information of your activities. When it comes to tracking and categorizing your expenses and revenue, keeping up-to-date on your bookkeeping responsibilities will make the tax form process that much easier comes tax season.