Your business income, reported properly
If you're self-employed and not incorporated, your business doesn't file its own return. Instead, you file an individual return each year that reports your business or professional income and deducts your business expenses. We prepare all the required documents and take the time to help you understand the return, so you're never signing something you haven't had explained.
Business income is reported on form T2125, the Statement of Business or Professional Activities. It sits alongside the rest of your personal return – T4 slips if you also have a job, RRSP receipts, family credits – so everything is filed together.
Our price for a self-employed business return is $120 – $200. Where your return falls in that range depends on the volume of your records and how organized they are, and we confirm the fee with you before we start.
Who this service is for
We work with unincorporated business owners of all kinds across Edmonton, Sherwood Park and surrounding areas.
Freelancers and consultants
Designers, writers, IT consultants and other professionals who invoice clients directly instead of receiving a T4.
Contractors and trades
Independent contractors, renovators, cleaners and tradespeople who buy their own materials and use their own tools and vehicles.
Home-based businesses
Tutors, online sellers, home daycares and other businesses run from a home office or spare room.
Side businesses
Employees who also earn business income in the evenings or on weekends, reported on the same personal return.
New sole proprietors
People in their first year of business who want to start with the right records and the right registrations.
Business expenses you may be able to deduct
Self-employed people may deduct reasonable expenses incurred to earn their business income. The important words are reasonable and incurred to earn income: an expense that's partly personal, like a phone or a vehicle, is generally claimed only for the business portion.
Larger purchases such as equipment, computers or a vehicle generally aren't deducted all at once; they're claimed over several years through capital cost allowance. We'll sort out which costs are current expenses and which are capital, and confirm what applies to you.
- Supplies and materials used in the business
- Advertising and promotion
- Business portion of phone and internet
- Professional fees, licences and memberships
- Business insurance and bank charges
- Rent for business premises
- Home office costs, where the space qualifies
- Vehicle expenses, based on business-use percentage
Home office and vehicle expenses
If you use part of your home for your business, a portion of home costs such as utilities, insurance, maintenance and rent or mortgage interest may be deductible. Whether you qualify depends on how the space is used – for example, whether it's your main place of business or used regularly to meet clients – and the claim is generally based on the share of the home used for the business.
Vehicle expenses are claimed based on your business-use percentage, which means you need to show how many kilometres you drove for business compared with your total driving. The simplest way is a kilometre logbook: the date, destination, purpose and distance of each business trip, plus odometer readings at the start and end of the year.
Without a logbook, a vehicle claim is hard to support if the CRA asks questions. With one, costs such as fuel, insurance, repairs, licence and registration may be claimed in proportion to business use.
CPP, instalments and GST
As an employee, your employer pays half of your CPP contributions. When you're self-employed, you pay both the employee and employer portions on your net business income, and the amount is calculated on your personal return. It's one of the reasons a first self-employed return can come as a surprise, and we explain it ahead of time.
No tax is withheld from business income, so the balance owing builds up over the year. Depending on your situation, the CRA may ask you to pay tax by instalments during the year. If you receive an instalment reminder, bring it in and we'll explain what it means for you.
GST registration is required once your taxable revenues exceed $30,000 in four consecutive calendar quarters – the small supplier threshold. Alberta has no provincial sales tax, so the rate here is the 5% GST. Some businesses below the threshold register voluntarily so they can claim input tax credits on purchases, and we can help you weigh whether that makes sense. GST/HST returns are filed monthly, quarterly or annually depending on your revenue and any elections.
What to bring for a self-employed return
Bring these along with the usual personal items from our Personal Tax Return Checklist.
Business income
- Sales records, invoices or deposit summaries
- Any T4A slips from clients
- Statements for business bank accounts
- GST returns filed during the year, if registered
Business expenses
- Receipts and bills, sorted by category
- Credit card statements showing business purchases
- Kilometre logbook and vehicle costs
- Home costs and the size of your workspace
Other documents
- Instalment reminders and payments made
- Purchases of equipment or vehicles
- Last year's return if you're new to us
Records: keep them, and keep them organized
You need to keep your tax records and receipts for six years from the end of the tax year they relate to. That includes invoices, receipts, bank statements, logbooks and the working papers behind your return. If the CRA reviews your return, these records are what support your income and every expense you've claimed.
Organization also affects your fee. A box of unsorted receipts takes longer to work through than a simple summary with receipts filed by month, and that time is the main reason our self-employed price is a range of $120 – $200 rather than a single number. A separate bank account or credit card for the business makes the job easier for everyone.
If your records have fallen behind, or there's simply more volume than you can manage, our bookkeeping service at $100 per hour can bring things up to date. We'll always tell you before any bookkeeping charges apply.
How we work with self-employed clients
A clear process, so you know what's happening and what it costs.
- 1
Book an appointment
Choose Whyte Ave or Sherwood Park when you book online and pick a time on that office's calendar, or call (780) 439-0050.
- 2
We look at your records
We review the volume and condition of your records and confirm where your fee falls in the $120 – $200 range before we start.
- 3
We prepare the T2125 and your return
We calculate business income and expenses, CPP on your self-employment earnings, and the rest of your personal return.
- 4
We explain and file
We walk you through the result, including any balance owing, file the return, and point out anything to keep in mind for next year.
June 15 versus April 30
Because you carried on a business, your filing deadline is June 15, and the same applies to your spouse or common-law partner. But the extra time is for filing only: any balance owing is still due April 30, and interest is charged on unpaid balances. When a deadline falls on a weekend or holiday, it moves to the next business day.
In practice, the best approach is to have your return prepared early enough to know what you owe by April 30. If you can't pay in full, file on time anyway – the late-filing penalty is 5% of the balance owing plus 1% for each full month the return is late, up to 12 months.