Self-Employed Taxes in Canada Filed by Our Accountants and Our Tax Software
Maximize your deductions with expert help and the T.U.A app.
Being self-employed in Canada means your tax return is more complex than a standard T4 return, and more is at stake. Your income is not automatically reported to the CRA by an employer. Your deductions require documentation. Getting any of this wrong triggers CRA reviews, penalties, or a larger tax bill than necessary. The Urban Accountant (T.U.A) handles your complete self-employed tax return for you.
File My Self-Employed Return With T.U.ASelf-Employment Made Simple
You track your income and expenses. Our accountants and our tax software turn them into a complete, accurate return.
Every Deduction You Are Owed
Vehicle, home office, equipment, professional fees, applied correctly by our accountants and our tax software.
Mixed Income Handled
Employment income plus self-employment income on the same return. No problem with T.U.A.
How Much Tax Does a Self-Employed Person Actually Pay in Canada?
As a self-employed Canadian, you pay both income tax and both the employee and employer portions of CPP contributions. Employees pay only the employee side of CPP. You pay the full contribution, which is 11.9 percent of your net self-employment income up to the annual maximum.
Your federal income tax rates are the same marginal rates as for employed Canadians. The key difference for your business is that your business expenses reduce your net income before your tax is calculated. This makes deduction tracking critical to lowering your final tax bill.
What Is Form T2125 and Why Does It Matter?
Self-employed Canadians report their business income and expenses on Form T2125. This is the Statement of Business or Professional Activities, and it is filed as part of your T1 personal return. A T4A is a slip that a contracted employer may provide to a contracted employee. It follows the same tax reporting rules as a sole proprietor business return. T4A income is reported on the T2125 form.
The T2125 calculates your net business income by taking your gross revenue and subtracting your allowable expenses. That net income is then added to any other income you earned for the year. If you run multiple businesses, you file a separate T2125 for each one. Our accountants and our tax software prepare your T2125 as part of your complete T1 filing.
What Business Expenses Can You Write Off in Canada?
The CRA allows you to deduct expenses that are reasonable and incurred to earn your business income. Eligible drivers are subject to a special 80% deduction rule for meals and beverages consumed during eligible travel periods. Common categories include advertising and marketing costs, business insurance premiums, and professional membership fees.
You can also write off your office supplies, equipment, software subscriptions, professional development, accounting fees, and bank charges on your business account. If you work from home, you can claim a proportional share of your rent, utilities, and internet as home office expenses. Our accountants and our tax software apply the deduction correctly when it applies to your business.
Does a Self-Employed Person Need a T4?
No, you do not. T4 slips are issued by employers to employees. If you are exclusively self-employed, you report your business revenue directly on your T2125 using your own supporting records like invoices and bank statements.
If you have both employment income and self-employment income in the same year, you will have a T4 from your employer and you will also file a T2125 for your business activity. Both are included in your single T1 return.
What Is the Filing Deadline If You Work for Yourself?
The filing deadline for self-employed Canadians and their spouses or common-law partners is June 15 each year. However, any tax balance you owe is due on April 30. Failing to pay by April 30 triggers daily compound interest on your outstanding balance.
It is strongly recommended to maintain a dedicated business bank account and a dedicated business credit card to keep your personal and business finances clearly separated. We recommend you upload your records in February or early March.
Self-employed Canadians pay the full CPP contribution, both the employee and employer share. That is 11.9 percent of net self-employment income. Getting your deductions right is the difference between a refund and an unexpected bill.
Do You Need to Register for HST or GST?
Registration is required once your business revenue exceeds $30,000 over four consecutive calendar quarters. Once registered, you charge GST or HST on your services, collect it from your clients, and remit the net amount to the CRA on your assigned schedule.
You can also claim input tax credits. This is money you already paid out in sales tax on your business expenses that the government gives back to you because you are running a registered business. Some self-employed Canadians register voluntarily before hitting $30,000 just to claim these credits.
How Do You Maximize Your Refund as a Self-Employed Canadian?
Maximizing your refund comes down to three factors. You must claim every eligible expense with proper documentation. You must correctly apply your home office and vehicle deductions. And you must make strategic RRSP contributions before the deadline.
How T.U.A Files Your Self-Employed Return
There are three ways to report your business expenses in the T.U.A app: Option 1: You handle your own bookkeeping by adding up your total expenses and recording them directly in the app. Option 2: You upload a third-party bookkeeping file such as a QuickBooks export or Excel spreadsheet, and our accountants will tabulate your business expense records. Option 3: You provide physical receipts and our bookkeepers will prepare and categorize your expenses on your behalf.
Our intake process for self-employed clients captures your gross business revenue, a categorized summary of your business expenses, your vehicle records if applicable, home office details if you work from home, and any HST/GST account information. You upload your supporting documents and our accountants and our tax software prepare the complete T2125 and T1 return.
Your accountant reviews your expense categories for accuracy, ensures all deductions meet CRA requirements, calculates your CPP contributions, applies your RRSP contributions, and files your complete return electronically via the CRA's EFILE professional system.
Self-Employed Returns Are Complex. Your Accountant Should Match.
Our accountants and our tax software handle T2125 preparation, expense deductions, and your complete T1 return.
Frequently Asked Questions
Clients upload their tax documents through the T.U.A app. Our accountants and our tax software prepare and file their return on their behalf. T.U.A is not DIY software. It is a professional tax filing service delivered digitally.