The start of a new year brings the opportunity to set new goals, commit to challenges, and gear up for your most successful year yet. The new year also brings us all that much closer to tax time, which can be a rather nerve-racking time of year for many of us, especially if you’re self-employed.
As a small business owner, I’m all too familiar with the feelings of uncertainty that tax time can bring on, and I’m completely guilty of leaving things to the last minute, or even until it’s too late. Seriously, up until very recently I don’t know what I would have done without having my dad to help me (read: force me) to file my taxes.
While attending the recent ‘Self Employed Breakfast Club Event’ hosted by TurboTax Canada and Credit Canada here in Toronto, I was relieved to discover that my emotions, reactions, and even (lack of) preparations for tax season are totally common among members of the self-employed club. Considering there are currently 3 million self-employed individuals in Canada, it makes me feel better to know I’m part of a pool that’s actually pretty big.
With a featured panel comprised of notable Canadian entrepreneurs that included Bruce Sellery of Moolala, Laura Davidson of the Whistle App, Erica Smith and Lorena Magallanes of The Condo Chicks, along with Laurie Campbell of Credit Canada and Jennifer Gorman of Intuit’s TurboTax Canada, the morning provided a number of insightful and informative tips. Best of all? It was all RELATABLE and, dare I say it, entertaining.
What I learned that morning is that TALKING about taxes with other people makes you realize you’re not alone and managing your taxes is actually easier than you think. So here I’m sharing 10 crucial things I learned about taxes for the self-employed in Canada at the Self-Employed Breakfast Club event:
Some People Love Taxes, Most People Don’t.
Even a quick show of a hands from the attendees in the room revealed that the majority of people can relate to not enjoying tax season, while the other few (apparently) love taxes so much they can’t get enough of them. Seriously, they seem to talk about tax season the way most people talk about pay day! If you aren’t the biggest fan of taxes, well, now you know that most people aren’t, and most people need some assistance and guidance when it comes to tax time.
Multiple Incomes Are Normal (But Complicated)
As mentioned earlier, there are currently 3 million self-employed individuals in Canada, and it’s made up of a mix of people who work for themselves full-time, and those who are making extra income through side hustles like Uber, Lyft and more. Having a side hustle is totally normal, but it can make things complicated at tax time when you have to separate multiple income streams along with your business and personal taxes. One of the features of QuickBooks Self-Employed that I was excited to learn about is that it can easily help you separate your business and personal expenses to keep things organised.
You Can’t Write-Off Everything
As Lorena of The Condo Chicks shared, one of their biggest struggles in the early days of their business was learning what they can and can’t write off. They assumed that clothes and dry cleaning could be written off because as real estate agents, appearance plays a big part in what they do. Unfortunately, they got a rude awakening when they discovered they couldn’t claim the receipts. Jennifer of Intuit Canada says it’s important to stay on top of the ever-changing rules of what can and can’t be written off for your business. If figuring out how to do this feels like a daunting task you just don’t have time for as a busy entrepreneur, I love that the new TurboTax SmartLook feature that allows you to connect with a product specialist for the help and advice you need in convenient and super efficient way.
DIY Until You Don’t Have To
Both Bruce and Erica of The Condo Chicks strongly agreed that one of the mistakes that a lot of self-employed people make is that they try and do EVERYTHING for their business themselves. Wearing every hat imaginable isn’t effective for your growth, and while it’s important to have an understanding of every role, Erica recommends hiring professionals (especially for areas such as accounting) as soon as you are financially healthy and able to do so. Depending on what you and your business are ready for, Intuit offers a range of QuickBooks accounting products that give you options at every level. From managing your books yourself, to working with one of their experts, you can always find something that works for you. This year they’ve also launched the exciting TurboTax SmartLook live feature that offers face-to-face virtual assistance with one of their (human) product specialists.
Filing Late Costs You More Money
According to Jennifer, when it comes to self-employed people and filing taxes, there are two important dates to remember. June 15th is the date when your taxes are physically due if you’re self-employed, but, if you owe money then the due date is still April 30th and the interest starts that day. Here she reminded all of us that by filing late you’re giving away money that you don’t have to. And who wants to do that?
Don’t Live In Fear of Creditors
Getting audited is one of the biggest fears we all share, especially as self-employed individuals. However, Bruce revealed he himself has been audited before, and, although it wasn’t the most enjoyable experience, it wasn’t as bad as he thought it would be. According to Jennifer, the best thing to do if you’re getting audited is to face it head on and EXPLAIN. Don’t ignore notices because they won’t go away. Sit down and start the process with the creditors; it’s a simple process of what you’ve provided and what you can prove.
Keep Records of Everything
To reiterate what was said above, there isn’t much to worry about if you have proper records to prove what you’ve reported and claimed. The best thing you can do to be prepared is to keep records of your expenses and transactions so that you can provide and prove them when you need to.
If You Pay HST You Need an HST Number
Getting or not getting an HST number as a new small business owner can be a confusing question, but I loved how simple Laura of Whistle App broke it down. She shared that when she first incorporated her business she didn’t get an HST number right away. Later she realized that because she was spending money on HST, she could recoup that money by having an HST number for her business.
Don’t Be Afraid To Ask Questions
One very key message that came through during the panel discussion is that everyone who is self-employed has something in common, and we can all learn from each other. Thinking that you’re all alone in the land of self-employment is one of the worst things you can think, and it really does help to talk to others about it and ask questions when you don’t know the answers. Instead of having a ‘Do It Yourself’ attitude about your taxes, change your mindset to ‘Do It Together’ and seek the assistance you need through TurboTax Canada offerings. Trust me, it’ll make things so much easier, and faster.
Over all, I’ve learned that common sense goes a long way when it comes to your taxes, but it’s also super common to feel overwhelmed and need help in order to file your taxes correctly, or on time. After a quick tutorial of the TurboTax online system, it became immediately clear to me that using TurboTax is one of the simplest and clearest solutions available to self-employed Canadians across the country. Whether you’re still in the DIY stage and are seeking a bit of help to file, or want to pass things off entirely for a TurboTax professional, the options are there for you. Before it’s too late, start getting the information you need, and asking those burning questions you need to be asking, by visiting TurboTax Canada website HERE!
(Story by Editor-in-Chief, Gracie Carroll)
This is a sponsored conversation written by me on behalf of TurboTax. The opinions and text are all mine.