Self-employed design professionals and tax returns: Dollars and sense

by | April 5, 2016 10:11 am

For design/construction professionals new to being self-employed, tax time can be particularly daunting. Whether an independent specifier-for-hire or a freelance building product marketing consultant, one must balance the books and fulfil tax obligations with the Canada Revenue Agency (CRA). Even those with the best of entrepreneurial spirit  and mastery of building science, can have trouble getting the most of their income tax and benefit return.

This is even more true for those who have only recently made the move to being self-employed. Getting new businesses off the ground is no small expense, from furnishing office space to new websites and initial advertising. Fortunately, one may be able to deduct these and any other reasonable expenses paid to earn income, leaving more money to reinvest into the business.

For those with home offices, many find themselves working well into the evening—responding to e-mails, updating books and records, editing documentation, and preparing for meetings with clients. When part of one’s home is used for business, maintenance costs such as heat, home insurance, electricity, and cleaning materials may be deductible. If the home is rented, part of this expense can also be deducted. To find out more, visit www.cra.gc.ca/smallbusiness[1], and select “Business expenses.”

To determine whether a goods and services tax/harmonized sales tax (GST/HST) account is needed, answering a short questionnaire[2] can be invaluable. Even when it is not necessary, registering could still let one claim input tax credits on the GST/HST paid on business purchases and expenses. (Those in Québec should instead visit www.revenuquebec.ca[3].)

Most Canadian income tax and benefit returns for 2015 are due on April 30. However, since this year’s date is a Saturday, CRA will consider tax returns (and payment) as filed on time if it receives submissions (or submissions are postmarked) by midnight on May 2. Self-employed individuals and their spouses or common-law partners have until June 15, to file their income tax and benefit returns, but any balance owing is still due no later than May 2.

Filing online allows CRA to process returns much faster—those due refunds can receive them in as little as eight business days by combining online filing with direct deposit. New this year, the CRA’s Auto-fill my return service is available through some NETFILE-certified software. This secure service automatically fills in certain parts of your income tax and benefit return. To use Auto-fill my return, one must be fully registered for My Account[4]. For a list of software and web applications, visit www.cra.gc.ca/netfilesoftware[5].

Those owing tax or having to pay tax by instalments can take advantage of pre-authorized debit to set up payments in advance at www.cra.gc.ca/payments[6]. They can also sign up for the new CRA Business Tax Reminders app free on Apple iOS, Google Android, and BlackBerry mobile platforms. These apps create reminders and alerts for key CRA due dates for things such as instalment payments, returns, remittances, and other tax-related matters to avoid penalties and interest.

It is also possible to stay up to date by receiving the notice of assessment online by registering[7] for online mail through CRA’s My Account or My Business Account.

Source URL: https://www.constructioncanada.net/self-employed-design-professionals-and-tax-returns-dollars-and-sense/

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