It can be tough being self-employed. Just ask my good friend, Claudio.
“Tim, I’ve learned that there are some drawbacks to self-employment,” he explained. “First, when you work for yourself you can’t get away with anything. I tried stealing office supplies once, then realized that they were already mine. Then I caught myself sleeping on the job, but couldn’t fire myself,” he said.
“How’s business been?” I asked him. “Well, it can be tough to make ends meet when you’re an entrepreneur,” he said. “But when you’re a broke entrepreneur,” he continued, “your mother always knows you’re broke because you’re likely borrowing $20 now and again from her, and your friends know because you conveniently forget your wallet every time you go out.”
“But Claudio,” I said, “don’t forget about all the tax benefits of being self-employed. When you file your tax return this year, remember the following things – these could save you tax.”
Make sure taxman sees you as self-employed
There are times when the Canada Revenue Agency might consider you an employee rather than self-employed. The problem? Fewer deductions. If you’re doing work for another business on a contract basis, the CRA might try to determine the intention of the two parties: Was the intention to enter an employee-employer relationship, or a business relationship? A written contract may speak to this intention. The CRA will also look at the following factors: Control (if you’re self-employed you’ll generally control many aspects of the services you provide, often including when, where and how you work), integration (a self-employed person can often be replaced and is not so integral to the business that his or her absence would jeopardize the success of the business), ownership of tools (a self-employed person generally provides his or her own tools), and financial risk (a self-employed person bears the risk of loss but also reaps the rewards of profit).
Split income with family
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