Self-Employment Tax Return

Preparing taxes at year-end is challenging when you own a business as a sole proprietor. You already know how stressful it is to keep track of receipts and income while staying up-to-date on tax policies – let alone filing your return on time.

Here are Bowie Financial Inc.’s tax tips to help you stay on track all year.  Let’s maximize your deductions, and lower your overall tax bill. 

Organize your business expenses and income throughout the year

Trying to remember specific expenditures months down the road or going through bank statements weeks later can leave things missed or forgotten. We recommend going over records monthly to keep up-to-date. Ever better, using a separate bank account for your business and a different credit card for paying business expenses will help make sure you track all of your income and expenses. We also recommend having a secure place to keep all physical business receipts and create a digital folder to keep all email receipts in case the Canada Revenue Agency (CRA) makes a request to review files. 

Take advantage of all tax deductions and credits

There are many business expenses you can claim as a tax deduction to help reduce the amount of taxes owing.  Let’s keep more money in your pocket!

Below is a list of some of the expenses you can deduct:

  • Advertising and promotional material

  • Insurance

  • Meals and entertainment (50%)

  • Office expenses

  • Accounting and legal fees

  • Automobile expense

  • Travel to client’s homes/businesses

  • Home office expenses

For more details, please visit our website

The list of eligible tax deductions is extensive, but there are also a number of expenses you cannot deduct to lower your business tax obligation:

  • Local travel (getting to and from work)

  • Interest and penalties paid on your income tax

  • Holidays and personal vacations

  • Clothing

Make sure you file the correct CRA form

Completing CRA forms is a challenge. If I have business invoices and I have some T-slips as an independent contractor; what form do I use? It depends on what contract you have, T4As, T5018s are usually considered self-employment income, so you’d report that on form T2125.

If you are an HST/GST registrant, you have to report GST/HST collected and remitted on form T2125. Make sure to enter your gross income on Line 13499 and net income on Line 13500 of the T1.

Plan to pay the CRA Quarterly

As a sole proprietor, your taxes are not being deducted from regular paycheques. This is where people can find themselves in trouble. Depending on your net income and where you live, you may need to pay installments to the CRA.  Per the CRA, you have to pay installments if your net tax owing is above the threshold ($3000 in Ontario) and these payments are due on the 15th of March, June, September, and December.  

Moreover, as a sole proprietor, your CPP contribution is not being deducted from your pay as it would be if you were a salaried employee. You need to contribute CPP as an employer and employee at the same time (10.5%), it will be calculated on your T1 return. 

Self-employed tax return deadline and tax efficiency

While the deadline for sole proprietors is June 15th, you still need to pay the tax owing before April 30th if you owe the tax, otherwise, interest will be charged. (We know this is ridiculous!)

Plan in advance, organize your business books and review the financial report in January or February, do RRSP contributions before the deadline (March 1st) if you think it will reduce your tax owing.  You might as well file your tax return before April 30th if you have not been paying the CRA all year long.

We all know professional advice will set you up for success! Our Tax Advisors will help you be tax-efficient all year round; saving you money in the long run.

Ready to get some help?  Check out our tax page at to find helpful checklists and book an appointment to work with one of our tax professionals.