As someone who has had a side business as a freelance writer/blogger/graphic designer for almost 10 years, I’ve realized there are plenty of advantages to working for yourself. You get to set your own hours, work from anywhere, take on as much or as little as you want, and the decision is up to you to decide who to work with. Freelancing has supplemented my income, and allowed me to travel the world! But honestly, tax season is the time of year that I always dread. There are so many receipts and paperwork to get through, so if you’re anything like me, you’ll try to push the filing deadline to the back of your mind.
But I’ve learned the hard way that waiting until the last possible moment to start on your tax paperwork will leave you stressed out. If you haven’t already done so, start organizing your receipts and invoices now – the last thing you want to do is stress yourself out and make mistakes to try and hit your filing deadline (which is April 30th).
Here are some tips to help you get all of the deductions that you qualify for:
Keep track of all receipts and invoices.
No matter how small or insignificant you think it is, make sure you’re saving every receipt and invoice. If you purchase something online – print the receipt and file it away. If you bill out for 15 minutes of work – make sure you keep a record of it, even if the invoice is only for $10.
Knowing exactly what receipts to keep can be important. For example, you might not think to keep receipts or records for furniture, postage, travel expenses for conferences, or interest on business related loans and bank charges – but portions of those expenses can all be deducted at the end of the year. Make sure to check out the Canada Revenue Agency website for a full list of what can be deducted.
Taking the effort to save all receipts and invoices will save you from headaches when you file your taxes, but it will also ensure that you have everything you need should you ever get audited.
Save for your taxes
It is extremely important that you set aside a portion of all the income you receive. It will save you from scrambling to come up with the money to pay your taxes when they come due. Based on the province that you live in, and the amount of deductions you will end up making, it’s hard to estimate how much of your income you should be saving for your taxes. A safe amount to put aside would be 30% of your gross income. You might end up paying a little more, or a little less, but at least you will have a starting point that you can adjust on an annual basis.
If your income exceeds $30,000 over the past four consecutive calendar quarters, you will need to register for a GST/HST account and start saving for that as well. GST/HST amounts vary by province, so make sure you know how much you should be saving.
Set up an RRSP
You won’t have a company pension plan to rely on, so you will have to save for retirement on your own. Contributing to an RRSP will lower your personal income amount, and you will end up paying less income tax because of it.
Here are 3 little things you can do right now in order to ensure next year’s tax season is easier on you:
- File your paperwork. If you have a shoebox full of receipts, take an hour each month to file and input the receipts into a spreadsheet. Staying on top of your receipts and invoices will keep your finances organized throughout the year, and will be easier to handle come tax time.
- Keep separate business bank accounts. It is significantly easier to figure out how much you’re actually spending on business-related expense if you hold a credit card and bank accounts specifically set up for your business expenses.
- Automatic RRSP contributions. RRSPs will lower your personal income amount, so have your bank automatically deduct a set amount of money out of your chequing account each month. You will end up paying less tax each year as a result.
Using an online tax program like UFile will make your life much easier. The software automate calculations, including child care expenses, tuition transfer, pension amounts (and pension splitting), as well as medical expenses and donations. This will ensure that your tax return is filed correctly and in your best interest – so you can spend more time working on projects or seeking out new clients. :)
What tax tips do you have for freelancers?
Note: this post has been sponsored by UFile, but all of the words are my own.
About UFile Tax Software
UFile is the consumer tax program from Thomson Reuters, located in Montreal, Quebec. It is a leading provider of tax preparation products and has served the professional tax community with personal and corporate tax products for more than 20 years. UFile products include UFile ONLINE (online tax software), UFile for Windows (UFile 4 and 12) and UFile PRO. For more information, please visit www.ufile.ca, or you can follow them on Twitter @ufile.
Well I’m back from a great trip to Portland. I came in well under budget – mostly because we were really conscious about our food expenses. And because, well, Portland is a really reasonably priced city for tourists.
Here’s my recap of the weekend:
As soon as BF got off work, we headed straight for the border. Instead of powering all the way through to Portland, we decided to take it easy and book a hotel around the halfway mark. I used my Marriott rewards points and got us a free night’s stay, and this was the only night we went to a restaurant for dinner. The place we went to – Trackside Pizza – is, you guessed it, beside a railroad track. :) When the first train rushes by, it’s kind of cool. But after the 5th or 6th one, it got a little annoying.
We were up early and on the road to Portland. I was a bit worried about the weather, since it was pouring on the drive down. But as soon as we entered Portland, the skies cleared, and we didn’t have a drop of rain all weekend. :) After an awesome brunch at Mother’s Bistro (no line-up!), we spent most of Friday wandering NW 23rd street – a cute area with awesome shops and great houses. I loved wandering down the street, popping in and out of stores, and of course sampling the ice cream at Salt and Straw (eventually sharing a scoop of sea salt and caramel). We both agreed that it was our favourite part of the weekend. After that, we had dinner at a food cart ($6 + $1 drink), and in the evening, we wandered over to Rogue Brewery for a few adult beverages.
Breakfast was quick and cheap, because we had a jam packed day. Our first stop was the Saturday Market, where we spent a few hours looking at all the artisan products for sale, and watching the bands and performers along the waterfront. :) Then we braved the line-up at Voodoo donuts (it was well worth the wait). We were disappointed by Chinatown (and opted not to pay to get into the gardens). Instead, we walked along the waterfront, and then did a bit of shopping downtown.
In the evening, we ventured out to Baghdad Theatre – which is about a 10-15 min. drive from downtown. The theatre is pretty cool – vintage feel, and you can order alcoholic drinks and pub food at your seats. It’s a bit of a novelty because we don’t really have that here in Vancouver. :) The movie showing was 300 … and it was actually the first movie I’ve ever walked out of. Just awful.
There was a massive St. Patrick’s Day run that was just outside our hotel. We were staying on the top floor of the hotel, so we got a great view before we hit the road back to Vancouver – making the usual pit stop at Seattle Premium Outlets, and visiting one of BF’s friends in Bellingham.
Anyway here is the breakdown of how much I personally spent while in Portland. It should be noted that I got our Marriott hotel for free using points, and BF paid for the 2 nights in Portland. We split the gas costs, and it was pretty reasonable considering we drove over 1,000km. As for food, we took turns paying, but I think he ended up paying for more than me.
All in all, it was a great trip to Portland. It’s one of my favourite American cities, and I can’t wait to go again. Although I think next time we might want to stay along the Oregon coast instead, just to get a different experience. :)
Back in the fall, I wrote a post called How much is your car costing you?, where I calculated that I was spending around $300/month for gas and insurance (11% of my net monthly income). And that didn’t even include maintenance like oil changes, repairs, or the actual cost of buying the car.
Even though I concluded that having a car was a clear “want” and not a “need,” I still depend on my car to lead the lifestyle I want for myself. Deciding to live in the suburbs, that’s the choice I made. And it’s the right choice for me now, but I’m not sure if it’s the right choice for me in the future.
When I start my new job later this month, I’ll be commuting from the suburbs to just outside of the downtown core. In the 6+ years I’ve lived here in Vancouver, I’ve never actually worked in Vancouver before… so I’m not sure what my commute will be like. Based on where I’m located, I think it will be similar to my old job (35-40 mins.). But the big difference is that when I’m over at BF’s house, he lives just 5 minutes away. AND since I’m working in such a populated area, most offices don’t have designated parking – so I had to rent a parking spot for $65/month.
Now that $65 parking stall is almost 50% less than any other stalls I’ve found in the area. That’s because I’m renting a space in an apartment building about 3 blocks from my office, and not in a regular parking lot. But if you combine that expense with having to rent a parking stall near BF’s house, my car costs have immediately risen by 25% to approximately $375/month.
I ran the numbers again, comparing my car costs with buying a transit pass, and my car still wins out even with this added cost. But just barely. If expenses go up again, I’m going to have to make some serious decisions. Even though I love where I live and I love my home, I’ve been spending the majority of my time in the city, and that’s only going to increase with this new job.
So maybe it will mean moving to a more central location down the road. Or maybe it will be as simple as letting go of some of my hobbies and buying a bus pass instead.