What can I claim as expenses as a self-employed person?

I seem to be making this list over and over again for self-employed people who want to know what they can claim as an expense against their income. Please contact me if you need any clarification about anything listed here, or have questions about other expenses that may be deductible for your business.

  1. Costs of goods bought for re-sale
  2. Materials
  3. Vehicles and equipment bought (assets over 500$) (These will be subject to depreciation calculations. You need to record the total cost and the date the item was purchased. contact me for more information about depreciation.)
  4. Small tools and equipment (under $500)
  5. Subcontractors
  6. Travel expenses
  7. Legal and accounting fees
  8. Advertising and promotion expenses
  9. Telephone bills (cell phone or workplace phone but not a home landline)
  10. Interest and bank and credit card charges
  11. Office supplies
  12. Postage and freight costs
  13. Internet costs (if for business and personal make an estimate of how much business and how much personal)
  14. Meals and entertainment (for the purpose of business they are 50% deductible)
  15. Insurance – business, professional liability (check with me for more clarification regarding personal life and medical insurance)
  16. Business use of home (The easiest way to calculate is if you have a dedicated area of your home that is an office 24/7. In this case you would calculate by square footage what proportion of your total living space is used for business.) This includes: property taxes, mortgage interest, rent,repairs and maintenance, utilities (not including home phone line). NB. If more than one person in a household is self-employed, only one of you can claim these expenses.
  17. Auto Expenses (You are required to log the business and personal use. Contact me for more information about ways to do this, or if you did not do it, other ways that you keep records that may suffice in the mean time. I do encourage everyone to do this for at least one year.) This includes gas, insurance, auto repairs and maintenance and parking.

This list was written off the top of my head and will probably be a work in progress for a little while. It is NOT intended to substitute for information from the Canada Revenue Agency. It is a guide to help you organize your shoebox full of receipts before you meet with  tax professional. anyone filing their own taxes should confirm the information I have given you by referring to the Canada Revenue Agency website.

Let’s Celebrate Small Business Week (Oct 20-26)

BDC Small Business Week Oct 20-26, 2013

BDC Small Business Week Oct 20-26, 2013

It is Small Business Week and I would like to take this opportunity to congratulate all my clients, colleagues and friends out there who are making a go of it on their own. Nice job!

Love and taxes

People keep asking me when they have to file as common law for tax purposes. Today I called CRA and this is what the friendly phone person told me. You have to file as common law when you have been living together for 12 months or when a couple (who share a home) have a baby together, or share custody of a child.

If you get married or become common law during the year, and you receive UCCB or GST/HST Credits, be sure to let the tax man know or expect to be asked to pay back over-payments.

EI for the self-employed

“I am thinking about applying for EI. How will they calculate how much I have to pay?”

-Kyla Hubbard, Cyclona Designs, Victoria, B.C.

Your EI premiums will be calculated based on your income tax and benefit return for the year in which you apply. For example, if you register in 2012 , your EI premiums will be calculated based on your 2012 income tax and benefit return and will be payable by April 30, 2013.

Regardless of when you register during a given year, EI premiums are payable based on your self-employed income for the entire year. See calculation of premiums page for more information.

See my blog post on EI for the self-employed for more information.



What’s in a name? (And what to do when I choose one?)

Naming your business can be as time consuming as naming a child. You want to find the right moniker, something that communicates the essential nature of your business, and something that will stand the test of time. You want a name that is both unique and memorable, something that sounds, well, right. And you need to find a handle that no one else is using.

Firstly, think about what you want your business to be. You may want to look for a name that suggests the nature of your business, or the location. But try not to be too limiting. You want to have the opportunity for your business to grow and adapt without having to change your name.

If you are a writer, artist or a bookkeeper, for example, something where your business is you, you may want to do business under your own name. (NB. If your legal business name is your own name, you do not need to register your business.)

When you have an idea, do a quick internet search to find out if any other businesses are using that name. I suggest starting with a domain name search. Ideally you want to get the domain name for your exact business name. Even if you don’t plan to set up a website right away, once you have settled on a business name, buy the domain name.
I also recommend doing some market-testing with your name. Ask as many people as you can what they think of your name. Do they find it memorable? What kind of impression does it give them of your business? For me, this was the most valuable part of the process of choosing ,my business name.
If you are a sole-proprietorship you do not necessarily need to register your name, though you will want to if you plan to get loans, open business bank accounts or to incorporate in the future.

To register your business, you first need to get your name approved by  B.C. Registry Services. They will check your proposed name against the list of BC registered corporations to make sure your name is unique. However, they do not check against other proprietorship or partnership names, so that initial Google search can be helpful to find out if anyone else is using the name you want.

Once  your business name has been approved, you have 56  days to register your business name.

As a sole proprietorship or partnership you can register online at the OneStop Business Registry in person at Small Business BC or by mail to the B.C. Corporate Registry.

In most municipalities in BC, you also need to register for a local business licence. Contact your city hall to find out which permits you require

Depending in the nature of your business, there may be additional licensing or other requirements. Be sure to confirm your obligations with local, provincial and federal authorities.