Self-Employed? Learn How to File Your Taxes in Canada

Being your own boss can be pretty rad. But doing your own taxes is one of the least fun parts of being self-employed πŸ™… . You don’t have a CFO who can make sure you’re withhold the right amount for your taxes. Don’t worry – we’ve got your back fam 😎.

Filing Your Taxes in Canada: The Basics

Unless you incorporate, if you’re making money selling goods or services, you are considered a sole-proprietor by Canada Revenue Agency (CRA). And yes, you still have to declare πŸ’Έ extra income πŸ’Έ even if you’re just doing some part-time freelancing on the side while also holding down a a full-time job.

Filing Your Taxes

When you are self-employed, you need to submit:

  • Form T1 for filing your tax return. You declare your income as a self-employed professional on line 104.
  • Form T2125 is what you use for deductibles. There’s a lot of expenses you can claim as deductibles so make sure you’re not missing out.
  • Form T4A is only needed if you’re an independent contractor and you should get it from each client you’re working with.

Remember, keeping a record of any income you make is 100% on you. Make sure you have a record of any transaction with all your clients in case you get audited 😱😱😱

You need to make sure you pay your taxes by April 30 each year but if you’re self-employed you can file your return right up until June 15. Not sure how much you need to pay? Use this online calculator to calculate your taxes.

More About Deductibles

There are a ton of expenses you can claim as deductibles, just make sure you keep things reasonable and make sure you have proof of anything you claim as a deduction. So yeah – hang onto those business dinner receipts. It’s usually a good idea to make a note about what the expense was for.

Here are the can’t miss deductions that you should pretty much always claim:

  • Internet and phone bills: This seems like a no-brainer, right? Remember that if you work from home you can even claim a percentage of your personal internet bill πŸ€“
  • Office rent: Just jot down how much you pay for your office space. If you work from home, you can claim part of your personal rent too – just figure out what percentage of your home is used as your home-office and claim that same percentage of your personal rent πŸ™
  • Advertising: Make sure you include all those Instagram ads you were super excited about πŸ“·
  • Travel expenses: This is a life-saver if you need to fly or drive meet clients. Save those gas bills, you can claim them too πŸš—


If the amount you made in a year is less than $30,000 then you don’t need to collect sales tax from clients. Keep track of how much you’re making though πŸ” because once you exceed that limit you need to start collecting GST or HST from clients. Registering for tax numbers is on you, but it’s thankfully pretty simple to do and you can file online.

How Much Should You be Setting Aside for Taxes?

If you’re just getting started just started working for yourself, you can make the mistake of spending every dollar you make πŸ‘Ž. Make sure you set aside at least 15% of your gross annual income to pay your tax bill. If you want to play it really safe, 25% will pretty much always be more than enough. The easiest way to do this is to put the right amount from every transaction into a tax-dedicated account so you know you’re totally covered. Bonus points if you use a savings account or short-term GIC so you can make a bit of interest on that tax-bound money too.

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