Getting ready for tax season – three steps to simplify filing your taxes

Tax return

The deadline for filing 2015 income tax is approaching quickly. Self-employed individuals will spend the coming weeks sorting through their paperwork to make sense of their profit and loss. Many will have kept great records using electronic tools or diligently in file folders; others will be sifting through the shoebox of papers vowing to do better next year.

We have put together three reminders to help you get started with preparing to report your self-employment income for 2015.

  1. What to declare?

The Government of Ontario’s Ministry of Revenue has published a helpful document this year to remind individuals that many forms of income count as self-employment income on their tax return. It lists sources including driving services (such as those in the sharing economy), cleaning service and renting space in a home, amongst others. Many of these types of income will also have related expenses.

  1. When to file?

There is sometimes confusion amongst small business owners regarding when their returns are due. While it is true that self-employed workers and their spouses may have until June 15 to file, anyone who owes a balance on their taxes must pay on or before April 30. The April 30 deadline is the same as the one used for most other Canadians, so given that self-employed people don’t have amounts already deducted from their pay, and hopefully made a profit, most will likely have to file by this date.

April 30 is a Saturday this year, so returns and payments are considered on-time if they are received by midnight on May 2.

  1. How much was profit?

The general tax return that an individual completes, has a place for business income and professional income, but how is the value calculated? The T2125 form is a supplementary form that gets added to a tax return to help figure out how much was actually earned as profit. The form helps business owners account for costs of materials, labour, operating expenses, capital costs, business use of home, and business use of car. The form is only six pages in length and is a great tool, both for calculating income, and for understanding how a file system could be organized to keep better records.

Happy filing! Follow Canada Revenue Agency @CanRevAgency, on twitter for helpful reminders and tips, and follow the Halton Region Small Business Centre @HaltonBusiness year-round for helpful information on Halton Region and starting a business.

This entry was posted in Halton Small Business Centre, Small Business Advice, Tips and Advice and tagged , , , , , , . Bookmark the permalink.

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