Tax Tips for Canadian Creatives
We are almost 50% through this year. Do you know if you’re saving enough for 🇨🇦 taxes owing?
If not, NOW is the time to stop & calculate. It will be difficult to catch up on money you don’t have saved as the year goes on. Don’t worry, if you start now there’s still time!
Here are a few quick tips to get you sorted:
* SAVE 30-40% *
General rule is to save anywhere from 30-40% of your billings for taxes in a separate account. This should cover you for: Federal & Provincial Taxes, CPP Premiums (10.9%), and EI Contributions (1.58% *voluntary). So, if you have $50,000 in billings this year so far, and you save a minimum of 30%, you should have $15,000 in a separate tax account right now.
* COLLECT GST/HST *
If you earn more than $30,000 in business revenue you also need to collect & save GST/HST. The day you surpassed that threshold is your effective date of registration. You only have 29 days from that effective date to register for GST/HST.
* TAXES VARY BETWEEN PROVINCES *
In Ontario we charge 13% HST. But if we are in Ontario and we deal with a client in Alberta, their GST is only 5% — they don’t have HST. Or if we deal with a client in BC their GST is 5%, plus they have 7% PST for a total of 12%.
* DEDUCTIONS *
The easiest way to determine what you can deduct in your business is to review the T2123 Form on the Government of Canada’s website. Here’s a quick list for a general overview:
✖️Home Office Expenses (calculated on sq. ft)
✖️Vehicle Expenses (calculated on usage)
✖️Supplies & Tools
✖️Computers (55%) & Software (100%)
✖️Business Travel
✖️Meals & Entertainment (50%)
These are just a few simple rules that we follow to prepare for taxes owed. If you are unsure of what you are responsible for collecting, tracking or saving reach out to a certified chartered accountant to get the best advice.
Want more great CANADIAN business tips & resources? Join our Creative Roots Members Resource Group. You will gain access to our growing list of Canadian small business resources and have a chance to join in on our monthly LIVE Creative Conversations.
So, come on! Put down your roots with us.
xo Kelly + Marlo
Co-founders, Creative Roots Co.
