(1) Reporting your Income & Expenses – Self-employed individuals report their income and expenses on their personal tax return. The net income (after expenses) will be taxable to you regardless of whether you withdraw cash from the business.
(2) Canada Pension Plan Contributions – Self-employed individuals are subject to mandatory Canada Pension Plan Contributions. The Canada Pension Plan Contributions are automatically calculated on your tax return. The max contributions are around $5,000. Half of the Canada Pension Plan Contributions are deductible against income and the half are credited as a tax credit at 20.05%.
(3) Tax Installments – Self-employed individuals are required to make quarterly estimated tax payments. You should pay the minimum recommended CRA installments to avoid underpayment penalty and interest charges.
SA Accounting Solutions is a Professional Corporation registered with Chartered Professional Accountants of Toronto, Ontario. We are a full service public accounting practice dedicated to working with the Accounting and Tax issues of small to mid-size enterprises (SMEs). Our services include Assurance, Accounting & Compliances, Asset Protection and Trust Planning, Tax Planning, Bookkeeping & Payroll, SR&ED, Outsourcing Controllership and Internal Controls and Incorporation & Business Plans. Please call us at 416 824 6950 or email us at email@example.com to book your one hour free consultation.