Sole Proprietor in Canada Q&A - Things to Know If You're Self-Employed

[@jessicamoorhouse]

Got any more questions about being a sole proprietor or small business owner for a follow-up video? Let me know 👇

[@sazzadabir6564]

Hi, Thank you so much, your video was very helpful. I just wanted to know if I open a sole proprietor or small IT business in one province then can I give service to companies of other provinces online?

[@jessicamoorhouse]

@@sazzadabir6564 If you run your sole proprietorship from one province, yes you can offer your services outside of that province and even the country.

[@sazzadabir6564]

Omg you replied, thank you so much for your help. I’m subscribing your channel right away, you’re the best 😄

[@andrewlee3687]

hello jessica , if you need ideas, maybe a video about hiring your first employee in canada?

[@tugrulavci4429]

Hi Jessica, Can I hire someone for my sole-business and show it as expense?

[@17RianaA]

Super helpful video! One thing I just wanted to note for EI (because I've looked into it and thought this might be helpful to someone): Once you use any of the benefits, you have to continue paying EI for as long as you're self-employed. So you can't just sign up for a year, take paid maternity leave, and then withdraw. You'd have to continue paying EI for the rest of your self-employed career. So even if you are planning to have children, it still may not work out financially for you to register for EI. Something to look into!

[@jessicamoorhouse]

Yes, a very good point! Once you opt-in, you cannot opt-out. Another big reason why it didn't seem like a good fit for me.

[@MinnieOnCam]

They give you 30 or 60 days to cancel your application

[@jessicamoorhouse]

@@MinnieOnCam I should have clarified what I meant, "You can withdraw from the program at any time, unless you have received special benefits as a self-employed person. If you have, you’ll continue paying premiums for as long as you’re self-employed." So if you're opted in and taken advantage of the EI benefits, you can't opt out.

[@playvilletoys]

@@jessicamoorhouse I wonder if that would change if you incorporate your business? I'm still learning so not sure.

[@edgarmatias]

Really great video… Thanks from a fellow Canadian!

[@jessicamoorhouse]

Thanks so much!

[@vaibhavkadyan9229]

This was super helpful. This is the kind of information I was actually looking for. Thank you so much for creating this video.

[@jessicamoorhouse]

Thanks so much for watching!

[@rickanddoriechanneltv5479]

Hi Jessica, I'm so happy to hear all your explanations about this Topic. Yes, it is helpful. Thank you.

[@jessicamoorhouse]

Thanks so much!

[@courtneyr9378]

happy to have found ur channel - super helpful info - TY!

[@jessicamoorhouse]

Thank you!

[@nicoledeacon913]

This was such great information, and explained so well. I learned more than I've learned hours googling!

[@jessicamoorhouse]

Oh that's amazing, I'm so glad! I should probably do a follow-up video to this since it's over a year old now and I've gotten so many other questions since.

[@geetbhardwaj3879]

Very basic but important questions replied. Thanks

[@jessicamoorhouse]

You're welcome!

[@Dudek28]

What kind of stuff can you expense at the end of the year under the business as a business expense when you are a sole proprietor? A percentage of the Home Internet bill if its a web based business? a percentage of the mortgage payment for the space I use in my house? A percentage of the electrical and water bill? You know, stuff like that.

[@jessicamoorhouse]

There are tons of expenses you can write-off for your business as a sole proprietor as long as they are essential to run your business. Here are some resources that go further into it: www.bdc.ca/en/articles-tools/money-finance/manage-finances/tax-deductible-expenses www.ownr.co/blog/tracking-and-claiming-tax-deductible-business-expenses-in-canada/ www.freshbooks.com/en-ca/hub/expenses/tax-deductions-for-small-business-canada

[@claudiam6815]

this video has been so helpful!! so glad i found your channel.

[@jessicamoorhouse]

Glad you found it helpful!

[@seamossinthecity]

Thank you for everything!1 You video are so damn helpful!!!

[@jessicamoorhouse]

Thanks so much, so glad you think so! :)

[@SashaIlic-Boskovic]

Followed! Thanks for the concise thorough videos!! Super helpful :) Just started watching today.

[@jessicamoorhouse]

Thanks so much!

[@a1videoprod]

you are so helpful. thank you for making this

[@jessicamoorhouse]

Thanks so much glad you found it helpful!

[@TheMarc0202]

Appreciate this info being an immigrant and figuring this all out, thanks!

[@jessicamoorhouse]

I'm so glad, happy to help in any way I can!

[@jean-david-ouellette]

Super rad, really appreciate this info. Thanks for the insights!

[@jessicamoorhouse]

Thanks so much for watching!

[@christopherinocalla]

Super helpful! Thanks Jessica!

[@jessicamoorhouse]

Glad it was helpful!

[@fellyday]

I'm so glad you said that about bank accounts because I was getting nervous, I knew about my name, working as a freelancer but yeah, the banks things make me nervous

[@jessicamoorhouse]

Happy to help!

[@ruthganan1]

Can I register more than one NAICS when I am creating a new business as a sole proprietorship?. If so, how can I do that? When I was trying to register it but there is an option for only one NAICS. Thanks

[@MotiA.]

Love this! Can you make a video on your thoughts on being an employee vs being a small business owner, and pros and cons of both. Thanks!

[@jessicamoorhouse]

A great idea!

[@greensoup0407]

Thank you for the video and it’s very help. Just regarding the question people often ask on “How much do I have to make before I have to report it to the CRA?” - I think some people confuse reporting income with the Personal Tax Credit which is the first $11,000 or so of income you earn is not subject to tax.

[@jessicamoorhouse]

You mean the Basic Personal Amount? If so, that has no impact on the eligibility requirements for signing up for GST/HST. In otherwords, no you can't deduct the Basic Personal Amount from your business revenue to be under the $30,000 mark.

[@daniellebee9]

Thank you for this video!

[@jessicamoorhouse]

And thank you for watching! :)

[@Celesica]

Thank you! Can you also make a video about taxes when your clients are from OUTSIDE Canada? For example, from US and you're working remotely, how to file your taxes? Thanks again!~

[@jessicamoorhouse]

Not sure if it's necessary to make a whole video on. When you're filing your taxes, you simply declare any self-employed income you've earned outside of Canada as foreign business income in Canadian dollars on form T2125 of your return. And if you use tax software it will walk you through it.

[@Celesica]

@@jessicamoorhouse thank you so much!~

[@kristicox9262]

So glad I found you! I'll be checking out your catalogue of videos here. : ) One thing I noticed, is when you talked about CPP, you said that we pay full amount on the "gross income" but then said that gross income is business revenue minus business expenses. Gross income is business revenue. Net income is business revenue minus business expenses. According to the revenue canada site, we pay it on net income.

[@jessicamoorhouse]

Glad you found the video helpful! Yes, I could have been more clear and the CRA does use specific language. A better term I should have used is net business income. Net income refers to the amount after business expenses and after income taxes. Net business income refers to business revenue minus business expenses, which is what CPP is calculated on. By gross income, I believe I was more referring to when you're an employee (so no business expenses), the amount you earn from employment before taxes is what CPP is calculated on.

[@RyanThomasWoods]

Would love another self employed Q&A🤗

[@jessicamoorhouse]

Thanks for the feedback, and a great idea! Will think about doing another one soon. Any questions you'd like to be answered?

[@shannonfassbender9997]

I sell most of my products at local markets, most people pay cash, can I report cash? If so how? Also if I am a vendor at a market before I register my sole prop, am I able to report that income that I earned prior to registering my business? I know this video is from three years ago but your videos are very helpful! Thank you!

[@cretnotonic]

I'm confused on how Sole Proprietorship works with your own name. With SP, you can just operate under your name. But if I'm a cleaning business, then my company name would just be my name? Not "(My name) cleaning services" How would people know what services I offer?

[@ChrisZaakir]

Great video answered all my questions thank you.

[@jessicamoorhouse]

Awesome, thanks for watching!

[@olgamackay7025]

You are very likable! Thanks for the great info 👍🏽

[@jessicamoorhouse]

Thanks!

[@Zach-uc8jk]

Great video thanks!

[@jessicamoorhouse]

Thanks for watching!

[@AmyElizabethFrith]

Thanks ! This has been helpful . :)

[@jessicamoorhouse]

Glad it was helpful!

[@AmyCourser]

You look gorgeous! Thanks for these really good videos :)

[@jessicamoorhouse]

Thank you :)

[@jamieyeomans3803]

Lots of info out there about how to value and sell or buy a million dollar business but what if you want to sell your small proprietor service business with a rented store front. would it be just assets minus liabilities plus outstanding startup debt? really like your way of explaining things and getting the info most don't know about, out there.

[@jessicamoorhouse]

You can find some helpful info about selling your sole prop business here: www.ownr.co/blog/selling-a-sole-proprietorship/

[@torogifighter1]

Question: Does your side hustle income be added to your annual salary and be taxed as a whole or separate? For example: you are making $50,000/year as an employee. And had a $10,000 income from a side hustle. Will you be taxed on a $60,000 income or taxed separately?

[@jessicamoorhouse]

Having a side hustle simply means you are a sole proprietor as well as an employee. As an employee, your employer deducts income tax and CPP from your income automatically, but with your side hustle, you have to set aside money to pay tax and CPP on that income. The money you earn in your side hustle is taxed at your marginal tax rate so yes, it's taxed at the same rate as your employment income (it's all taxed together, it's not separate. You might be thinking of being a corporation which is taxed separately). One helpful tool to see how much tax you might have to pay on your side hustle is this tax calculator www.wealthsimple.com/en-ca/tool/tax-calculator

[@janethpadernal8951]

Hi Jessica , Thank your for your info: I have a questions. I currently lives in Squamish, British Columbia. I am planning a small business in the town "vending machine" its my first time to do this and it will happen this coming month of June right now I am keep searching and reading lots of info. my question is which category of business am I? sole? or corporate? Do I need to register my name? what tips you recom and advices . thanks a lot

[@jessicamoorhouse]

You're a sole prop if you just start a business on your own using your own name. You have to go through several steps in order to incorporate. If you want to run your business under a different name than you're personal name, then yes you have to register your business with your province. I always highly recommend working with an accountant to provide you with advice and guidance as you navigate your business and to avoid accounting/tax errors.

[@dougienaus2084]

Thank you, this was helpful.

[@jessicamoorhouse]

Awesome! I'll probably do more in the future so let me know if you have any more questions!

[@lookingforwardto]

I have been looking for such info for some days.frtunately, got this one. Could you pls share some business ideas for newcomer RP's?thanks

[@jessicamoorhouse]

Glad I could help, though not sure I can help on the business idea front but I'm sure you'll be able to find a business that you're excited about and makes sense for you.

[@TheMl145]

I like these videos. I do bit of photography on the side and am now getting asked to be hired to do it for people. When researching there is so little info about starting a sole prop from a Canadian perspective.

[@jessicamoorhouse]

It's so true! I'm even guilty when I first started out I didn't know much! Hopefully I can help to bridge that gap.

[@Dani-gr4xv]

Yes! I’m struggling to figure out the basics of what needs to be done to start

[@TheKings045]

I understand that if you use just your name "John Smith" you don't need to register a business name, but it's doesn't really tell people what you do, instead of using "John Smith designs" and have to register that name could you just use only your name "John smith" then use "design" as a sub subtitle on your business cards and the side of your work vehicle so people can understand what you do? Edit: and do you have to use your full name? Or can you just use your last name? Or first name?

[@jessicamoorhouse]

You're talking about having a trade name, for which you would need to register www.canada.ca/en/services/business/start/choosing-a-business-name-3.html

[@patriciatomlin836]

Hi Jessica, do you have a video on how to find an accountant? Also, which, if an, expences are tax deductable if you are self employed as opposed to being registered as a business?

[@jessicamoorhouse]

Write-offs for self-employed or registered business are the same. And to find an accountant you can ask around anyone you know who runs a business for recommendations, look at reviews online, or check out the list on the CPA Canada website.

[@cretnotonic]

"If your business is a sole proprietorship or general partnership, you can register it quickly and easily with the Province of British Columbia online using the OneStop Business Registration Service." I found this text online for BC. I know you're in Ontario but would you happen to know anything about this? I heard from another Ontario YT video that it's the same as what you said. You do not need to register if it's a sole proprietorship.

[@jessicamoorhouse]

You should definitely watch this new video about registering a biz, it should answer your Q. But if you do need to register and your business is based out of BC, then yes you could use BC's OneStop Business Registration Service. kzbin.info/www/bejne/iWPQeaSXntqDgNU

[@catb4242]

Have been browsing around your sole proprietor videos and they're super helpful in order to understand how that other business world works. I still get pretty confused to what expenses can I put when doing taxes. I would love to have some tips with different scenarios like living in common-law and your partner owning the house when working on a side gig from home. Can I include mortgage, heat, electricity, etc; expenses if he's the one paying for them? Also, some more clear information on how it works if your main job is under employer, and side gig as sole proprietor, is it a big cake at the end of the year that counts, or is it separate. Best ;)😃

[@jessicamoorhouse]

Great questions! So short answer about if your partner is paying the bills, can you claim them as business expenses, the answer is no. You woul have to be paying for them. You can only claim expenses you pay for. With that said, if you pay your partner rent, then you may be able to claim that. You can find more info about business expenses here: www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html#telephoneandutilities. And if you're a sole proprietor but also earn employment income from an employer, yes it's all taxed at your personal marginal tax rate. It would only be separate if your business was incorporated.

[@OtherPeoplesBusiness_]

If you Register your business but don’t make any money for that year what do you do?

[@jessicamoorhouse]

You won't get penalized if that's what you're worried about, however if you are consistently not earning an income, especially after the first few years, but are claiming business expenses as tax deductions, the CRA may reject those deductions since it may question whether you started your business with the intent to actually turn a profit or to "game the system" and be able to write off expenses.

[@gostrainingsystems]

can you do a video on starting a corporation and T2 forms?

[@jessicamoorhouse]

Will definitely be making some videos on incorporating! I'm right in the thick of it so will have some stuff to share. But right off the bat, hire an accountant and lawyer. I'm so glad I didn't attempt to DIY this.

[@gostrainingsystems]

@@jessicamoorhouse already on it! looking forward to your video!

[@arunkumarr9784]

Jessica - you are a life saver! Thank you so much!

[@jessicamoorhouse]

You're so welcome!

[@Giant_Little_World]

Hi, just filled out form for business ames registry on ontario, and what are what r steps please? I know i need the license, and OB, im a little lost, please assist me. Thanks ❤❤

[@keepingitsimple88]

How do you transfer money from your business bank account into your personal bank account ?

[@jessicamoorhouse]

If you're a sole proprietor or partnership, just like normal (Interac e-transfer or bank transfer or transfer between accounts). If incorporated, it's not that simple. You need to first determine is the money a dividend, salary, or bonus, then through your business bank account when setting up the transfer you would choose which one then it should settle in your personal account in a day or two. Depends on the bank.

[@keepingitsimple88]

Awesome, subscribed @@jessicamoorhouse

[@ivan33776]

Re insurance: is it true that as self-employed you can deduct insurance premium? Re CPP: it is a % of income, but has a limit. And also self-employed can deduct 50% of CPP (employer part) and 15% (employee part), right?

[@jessicamoorhouse]

If you're asking can you deduct business insurance premiums if you're self-employed, it depends but it's possible they may be eligible. And yes, as a self-employed person you pay the full CPP premium which is 11.4% of your pensionable earnings up to a maximum of $6,999.60 for 2022.

[@Robin.McNaueal]

I think this was the first video I found of yours & SO helpful... & they continue to be. THANK YOU. I have a question that may have already been asked somewhere... I'm setting up a freelance writing career that may very well include many payments from the US (& elsewhere). As someone just starting out (sole prop & likely in my own name - at least for payments), what forms of payment do I have to expect & is there an app or software you'd recommend to allow this in the easiest way possible? I would think it should be simple in this digital age & yet Canadian banks are not easily connected to US ones, etc. Whatever insight you might have would be great!

[@jessicamoorhouse]

Accepting payments from the U.S.? You can use Quickbooks or Freshbooks (and possibly other accounting software) and they typically offer credit card payments linked to your invoices. Or if accepting wire transfers, you can use something like Transferwire.

[@td1068]

Thank you so much for all this information. As a sole proprietor do you have to pay into cpp or is that a choice just like e.i?

[@jessicamoorhouse]

CPP is mandatory for every Canadian. You pay it with your income taxes. And if you're a sole prop, that also means you pay the personal and employer amounts.

[@carlosmoreno9820]

Hi Jessica, great video! It is very informative. I have another question, I am currently employed and want to start a small business on the side. how do you separate your personal income tax from the business taxes? Does the business gets taxed on the same tax bracket that I am currently in? Trying to see if self proprietorship is the right way to go or if it is worth incorporating (more expensive and complicated) as the business is just going to start and maybe the first or second year won't be that profitable.

[@jessicamoorhouse]

When you're a sole proprietor, your employment income and self-employment income are considered the same and are both taxed at your marginal tax rate. You would only submit one tax return for all of your different income.

[@tinnuola]

I opened a sole proprietorship business earlier this year but I have never used it or intend to use it in the future? Please do you know how I can close it?

[@jessicamoorhouse]

Did you register it? If so, then you would close it through whichever province you registered it with.

[@ethiopianbusinesstube]

Hi Jessica, thank you for this amazing video. I have learnt a lot. Here I have a Question. My business is registered as sole prop. and I didn't make that much money on it yet. It's 8month old business. I do have a BN# so Should I claim tax this year for it, even though my expenses are higher than income? and how is it benefit me doing that. Thank you so so much

[@jessicamoorhouse]

You have to report any business income and business expenses on your tax return, it doesn't matter if in the end your business earned a loss after expenses. Not reporting is considered tax evasion and it's illegal.

[@ethiopianbusinesstube]

@@jessicamoorhouse thank you so much. I appreciate that you're taking your time to respond here

[@donotmiss5503]

Hello Jessica, is the report in personal level? or is it seperate personal seperate sole prop

[@markw3267]

If your sole proprietorship is under your personal name, does your youtube channel have to be your personal name also?

[@jessicamoorhouse]

Your channel name no, but your Google Adsense info yes.

[@markw3267]

@@jessicamoorhouse Thank you.

[@MinnieOnCam]

I found the confusion is USA information is bleeding into Canada. People are confusing the small business rules of the USA to Canada. That's probably where the how much do you have to claim in business income is coming from since the USA different rules and annoyingly a lot of the content that comes up is USA first.

[@jessicamoorhouse]

Totally agree, way to much U.S. info is confused as applicable in Canada, so hoping to clarify things with this channel! :)

[@AlexanderKausch]

Hi, how to close a sole proprietor business if you're outside the province?

[@jessicamoorhouse]

You can do it online via the province you registered your sole prop with. For example, if registered in BC there's info on their website on how to close it down. www2.gov.bc.ca/gov/content/employment-business/business/managing-a-business/permits-licences/businesses-incorporated-companies/proprietorships-partnerships#make-changes

[@shubhamanand6622]

If we get taxes for a service based business, where or when do we deposit them and other details we should keep. Please explain

[@jessicamoorhouse]

Are you asking how to remit your GST/HST? This video may help kzbin.info/www/bejne/pqutqWWMgs2Mac0

[@Wilderman1]

Hello, I am working part time and I have sole proprietorship business. What are my options interns for EI benefits.

[@jessicamoorhouse]

You can find more info here www.canada.ca/en/employment-social-development/programs/ei/ei-list/working-while-claim.html

[@benincasadesign8139]

Hello! I’m so glad I found your channel - I have had my business for a quite a few years now, and now I’m at the point where I really feel the need to delegate & outsource some small tasks to a freelancer / independent contractor. I’m having a really hard time finding specific information on how to go about this within Canada - as a sole proprietor do I need to fill out any forms or do anything specific to legally hire a freelancer for odd jobs?? Right now I’m just looking on Upwork and Fiverr for a social media assistant. Thanks in advance!

[@jessicamoorhouse]

Nope. If you're hiring a freelancer/contractor, it's just a matter of them sending you an invoice for services rendered and then writing it off as a business expense on your income taxes. Or if using a platform like Upwork or Fiverr, the contractor charges your payment method for their services through the platform so you can just pull a report to keep track.

[@benincasadesign8139]

@@jessicamoorhouse Amazing, thank you so much for the quick reply!! Super appreciate the help.

[@chantel7039]

I’d love yo hear you talk about why you are incorporate. I’m always looking for solid info on this (aside from the liability reasons). The last time I got some advice about this topic I was told only at about $250k yearly revenue does the yearly costs of maintaining a LLC surpass the tax savings of it (vs. sole prop). Do you agree with that?

[@jessicamoorhouse]

For me, tax savings was the main reason I chose to incorporate. To give you some perspective, my business earned 6 figures every year I was a sole proprietor (except for the first year) but because of the amount of my business expenses and contributions to my RRSP which I used as tax deductions, I was always in a fairly low tax bracket. But this year, my business revenue had increased substantially compared to previous years and I was running out of RRSP room. When discussing things with my accountant, it made sense for me to finally incorporate to prevent me from personally jumping into a higher tax bracket since I could control specifically how much I wanted to pay myself as a salary. This also meant I could keep more funds inside my company to continue to invest in it and hire people to help me run my business more efficiently. But it is important to know once you incorporate, your taxes do become more complex and expensive to file. As an example, I now hire a bookkeeper to help me organize everything in Quickbooks and organizing and filing my corporate and personal taxes with my accountant will be about $3,000.

[@jatinderbhasin6634]

Loved your videos, Jessica. Thank you so much for all the invaluable information! Just a couple of clarifications. If I am a sole proprietor and I register a different company name, am I still able to take advantage of the RRSP contributions to minimize my annual income? And do I need to pay myself from the company bank account or is it one and the same, just a holding place for monies being collected by cheque under a different name? Thank you so much!!

[@jessicamoorhouse]

Correct, when you're a sole proprietor, that just means that your business finances and personal finances are one in the same, everything you earn is taxed at your marginal tax rate. So yes you can take advantage of RRSP contributions to reduce your taxable income and ya a business bank account is really just a holding place for your money. It's basically the same as if you held it in a personal bank account. It doesn't matter how much you leave in that account and "pay" yourself, everything you earn is taxed at your marginal tax rate. Whereas when you're incorporated, that's a different situation which I go through in this video kzbin.info/www/bejne/jaevqqdsp5h7ipo

[@pkkontario]

Clear and concise - thank you for a very informative video. I really appreciate the timeline sectioning. I have subscribed based solely on this video and will be watching much more of your informative content. I am retired but looking to sell products on the Amazon platform for which I will receive a commission. Procurement and the actual sales, including the relevant sales taxes collected for each jurisdiction will be handled by Amazon. I will initially operate under my own name as a sole proprietor and treat the income as personal. Are there any eventualities I should be concerned about doing it this way? Any pitfalls you may see? Thanks again!

[@jessicamoorhouse]

Thanks so much Peter! I've never done Amazon selling so can't really speak to any of that, but honestly the best thing I ever did when starting my business was hire a business accountant to do my taxes but also to be able to ask specific questions and get tailored advice. Not only can it be deducted as a business expense but it's always money well spent (because you avoid making some expensive mistakes). It was my accountant who helped me decide at a certain point to incorporate which so far has been a great decision for me. But for some other tips, I'd also suggest using software to help you get organized. I used Freshbooks for years and for sole proprietors I think it's great. I now use Quickbooks but it is no where near as user friendly, hence why I've now hired a bookkeeper! I'd also suggest reading Profit First. It's a great book (which I'll be making a video on soon. It has great tips on how to ensure you keep business expenses at a reasonable level so you always put your business profit first (which is obviously the main point of business!). :)

[@ShaNails-ru9up]

Hi! so you are saying I can register for GST, and they give me a business number? Because I find that they ask me for a business number to register for GST.... thanks

[@jessicamoorhouse]

You can find the steps to do both here www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/account-register.html

[@arandomperson6706]

Hi. If you were under 18 how would you go about getting a bank account to receive money?

[@jessicamoorhouse]

So in Canada if you're aged 12-18+, you can open a bank account on your own. It's only when you're under 12 that you must be accompanied by a parent or legal guardian to open an account.

[@arandomperson6706]

I know it probably sounds a bit like a dumb question but if we operate under our legal name does that mean our social media names for our business have to be that name? Or can they be something different in the case that the name is already taken?

[@jessicamoorhouse]

You can use whatever names you want on your social media accounts, but if you're a sole proprietor using your legal name for your business, when you invoice clients or give receipts to customers, you need to have your legal name noted as your business name on there.

[@ewcamaewcama]

I am real estate agent in Ontario, wondering why my T4A does not have amount for Income Tax deducted

[@jessicamoorhouse]

Can't really speak to your situation but hopefully this article will help clarify the T4A for you turbotax.intuit.ca/tips/tax-tip-how-to-claim-your-t4a-income-5510

[@fanglu1623]

Thanks for the video. I got a question, can you pay yourself salary if you are self employed ?

[@jessicamoorhouse]

Of course you can pay yourself money out of your self-employed business, but it wouldn't technically be categorized as a salary. You'd have to be incorporated for that as there are different tax rules. But if you run a self-employed business, you can pay yourself an income, just make sure to set aside money for income taxes and remember eligible business expenses can be tax deductible.

[@kellyc9234]

Thank you for your informative channel. I registered a service business and also have HST number. I operated for only just a couple of months by myself and stopped due to covid and took some personal time. Now I am thinking to operate it again and have lots of questions as I still feel quite new navigating to run a small business. I have all the ideas and visualizations that I am going to turn into tangible results. So in-order to do that I have been reading and researching for helpful tips. My questions are - insurance for the business ( damages or lawsuit ), myself ( health, dental, eye ) and employee/s ( If I decided to - hurt/injured ) Accountant - ( need help to do all right steps, expenses, income, profit, taxes, which things can be filed under business expenses, help to pay employee/s, prepare invoices, etc ). How and where can I find a good accountant? Thank you in advance and looking forward for your advice.

[@jessicamoorhouse]

You can ask for personal recommendations from other business owners you know or search online for a CPA familiar with your line of work or industry. There are also a lot of great resources for small businesses on BDO.ca and Ownr.ca

[@kellyc9234]

@@jessicamoorhouse Thank you.

[@jessicamoorhouse]

@@kellyc9234 You're welcome!

[@artanndoni7048]

If you have google you can search for an accountant and they can explain everything

[@atawhim]

Hey Jessica, thank you for the video. Great starter guide. I am currently looking into starting a online coaching business in Ontario, Canada, I’d like to get paid is USD and likely keep some of it as USD. I am wondering what is the best way to get paid is USD (I.e paypal, etc)? How can I as a Canadian keep my funds in USD? And how would I file for Canadian taxes in this respect if I am? Should I instead base my business in the US? Really appreciate your help. If you haven’t made a video on this yet, I would highly recommend it. I am not seeing much info on it at the moment! Thank you. ❤

[@jessicamoorhouse]

Filing taxes wouldn't change if you accept a different currency for payment, I see a lot of Canadian online businesses charge USD instead of CAD because they also have a US customer base and want to likely earn more profit from the currency differential. As for the best way to get paid, depends on your business. Are you sending invoices? If so, then you can use accounting software like Quickbooks that allows you to set the currency and accept credit card payments. Another option to accept wire transfers is with Wise. Or if it's goods you're selling you can use platforms like Stripe, Shopify, Square. There are lots of options, though they all of course charge fees, usually a percentage of each purchase.

[@atawhim]

​@@jessicamoorhouse Thanks Jessica, really appreciate you taking the time to answer this questions!

[@fhieteng4635]

Hi I have question about registering address ? I don’t want to put my home address on the products that I will be selling as a sole proprietorship . What should we do in that case . Thank you so much in advance

[@jessicamoorhouse]

Register for a PO Box?

[@fhieteng4635]

@@jessicamoorhouse ok thank you

[@danbenosa7096]

HI, If I have 1 business number under my name and my business is uber. Suddenly i want to change it to printing business and wholesale. can i still sell things under my business names? and also how can i produce an invoice?

[@shidiezwei]

Wow this is amazing. Thank you! Quick question, I usually only get e-transfers for the contracts I do as a sole proprietor, never cheques. I do have a registered business name (operating under my nickname). Does this mean I don't need a separate bank account?

[@jessicamoorhouse]

Ya it doesn't really matter. If it's all electronic and e-transfers just flow into your personal bank account that's fine. You'll likely be able to save on bank fees that way. The only reason I needed a business chequing as a sole proprietor was because of the cheques.

[@kendranguyen3411]

Thanks for the great video! I work in the IT field for a company in the US. Do you have any good resources or advice on how to know if it’s worth it to self incorporate? Currently I am a contractor but I’m really not sure if it is financially advantageous to self incorporate

[@jessicamoorhouse]

I'd suggest talking to a tax accountant. They'd be able to take a look at your situation and see if it makes financial sense.

[@reyo2630]

Do you recommend getting a business credit card and a business bank? As a sole proprietorship or would a normal credit card/bank be okay.

[@jessicamoorhouse]

You only need a "business" credit card or bank account if you're running your business under a different name than your personal legal name. For example, if you run your business under XYZ Consulting, then you would need a business bank account and credit card under that name. If you're just running it under your name with is Reyo Smith, then you can simply use personal bank accounts and credit cards for your business.

[@eyoabethiopia5914]

Thank you so much

[@jessicamoorhouse]

You're welcome!

[@sewonban3965]

I’m currently a sole proprietor offering tutoring services in Quebec. First of all, I want to thank you for the help you provide with these videos. Also, I have a question about the income part. Is it true that if I’m using my legal name, all I need to do is to report my income and pay the taxes for my business? Is there something else that I must do in order to let the government know about my sole proprietorship?

[@jessicamoorhouse]

I get this question a lot and correct there's nothing special you need to do. If you're using your personal legal name, you don't need to register your business. When you file your taxes, you would simply report your self-employed income on lines 13499 to 14299, and if you also work for an employer you would report employment income on line 10100. If you file your taxes using online tax software, it will guide you where to report those different incomes so it's super straightforward.

[@sewonban3965]

@@jessicamoorhouseThank you, I appreciate it:)

[@dylanmunt4787]

Is opting out of cpp all together for a sole prop an option? Thanks!

[@jessicamoorhouse]

No, you can't opt out of CPP.

[@anonymous-user-2024]

Thanks for the video. For sole proprietorship that is not registered and not signed up for GST/HST, what personal information do clients need to make a payment to the sole proprietorship?

[@jessicamoorhouse]

Not sure what you mean? Are you asking what info to put on your invoice to clients? You just need to include your name, address, invoice number, contact information and payment details along with the details of the client.

[@bazaguru]

I am in IT Field, work as a contractor, and have a sole proprietor. Can I file my tax return through turbo tax?

[@jessicamoorhouse]

Yes by using TurboTax Self-Employed.

[@thisisvaze]

Thank you so much, this is so helpfull! I had a question, would be great if you could help me. Do we need an HST number for self-employed? and are there any benifits of getting one.

[@jessicamoorhouse]

This video should answer your question kzbin.info/www/bejne/bIi5nZhrhtF5qK8

[@ahmedelsawah2020]

is this mean if i run my sole and have a full time job i will lose my benifits for health from my employer ?

[@jessicamoorhouse]

No it won't. I worked full-time for an employer and ran my sole prop on the side for years. Being a sole prop on top of your day job does in no way affect any benefits you get from your employer. That being said, you do need to pay taxes and some additional CPP contributions if you earn any income from your sole prop.

[@slamdoozle]

How do you make your social media links clickable like that in the video description?

[@jessicamoorhouse]

I just put the normal links in there and then KZbin made them look fancy haha.

[@slamdoozle]

@jessicamoorhouse I just figured that out, I was wondering how everyone did it haha. Thanks!

[@nadjagabisilveira]

Great video! I have a student permit in Canada, so can I open my own business as a Sole Proprietor?

[@jessicamoorhouse]

This article should help you www.canada.ca/en/immigration-refugees-citizenship/services/study-canada/work/work-off-campus.html

[@hasinaakter6365]

Hi, I'm an international student in Canada and I am interested in starting a sole proprietorship business. How do I prove IRCC that I'm working 20hrs/week and what rax forms do I need to submit? Thanks!

[@jessicamoorhouse]

That's not something I could help you with, I'd suggest talking to a CPA.

[@jp8260]

Can you purchase a housing under your sole Proprietor business? Can you still work for someone else to earnT4 income even you have your own company? Thank you so much!

[@jessicamoorhouse]

If you a buy a rental property and it's not through a corporation, then it would be considered to be under a sole prop since any income earned through a sole prop is simply taxed at your personal tax rate. And yes you can still work for an employer as and employee but also have a sole prop business on the side if you like. But again, anything you earn in your business is simply taxed at your personal tax rate, the same tax rate as income earned through your employer.

[@SaiTama-xy9qi]

Hi Jessica, hopefully this question gets to you from an older video comment, but I was wondering, I'm working on a long-term project that won't see any income for a long while, so I am self-employed with no income, no other job. I need to show CRA that I am self-employed for benefit reasons, but I'm not sure how to do that. I've been told to fill out t2125, but it seems to be for income purposes. How do I show that I am in self-employment to Canada without any income?

[@jessicamoorhouse]

That's a good question. Even though you aren't earning money, you can still be considered a small business as long as you keep records of everything else such as invoices (even if the to-be-paid date is in the future) and businesses expenses. With that said, I'd suggest gathering some more info from an accountant or the Liaison Office service www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2022/self-employed-canada-revenueagency-can-help-understand-tax-obligations.html

[@leondoerfer828]

Do you have to have a separate PayPal account for your business account?

[@jessicamoorhouse]

If you're a sole proprietor no as long as you can keep track of personal transactions and business transactions. But if you want to keep better organized, you may want to have a separate account for it.

[@ghostoferlock]

Hi Jessica, as a financial business, I am guessing your overhead is very low as you have no inventory, and need no storage room, etc. If you leave a good percentage of your company value in your company and don't withdraw it, can you purchase securites with it, then sell some when you need to in, say 20 years, and be taxed at the lower tax rate because you are moving towards being incorporated ? If you then pay personal income taxes on whatever you draw out , is this within the guidlines ? My line of thought is that if the business pays minimal taxes as a corporation, and then you pay at a personal rate, how could it not be legal ?

[@jessicamoorhouse]

As an incorporated business, you can use some of the cash in the business to invest, however it sounds like you're asking about using the value within my business (equity financing) to get a loan and use that debt to invest to earn a profit? If I understand you right, this is something you could do, but not something I would do. I like my business being debt-free, gives me peace of mind.

[@ghostoferlock]

@@jessicamoorhouse nothing to do with financing debt necessarily, but to have money in an incorporated business, I am guessing the taxation would be lower than personal taxes, so to grow the wealth of a business and personal wealth by finding a sweet spot that would allow for equity growth as minimal, but LEGAL tax rates.

[@lanicetye]

thank you for this video! what insurance would i get if i'm makeup artist wanting to insure my kit/products? I'm having a hard time finding the proper company to look into. I'm in London, ON - any recommendations?

[@jessicamoorhouse]

I'd suggest talking to an insurance broker to ask what's the best insurance for your type of business. For example (and not affiliated to this company, just did a google search), this broker has info on insurance for beauty professionals www.zensurance.com/beauty-insurance

[@Natureway-i8l]

Hello. Sorry I have a basic question. As self-employed workers, we pay both HST and income tax? Income tax is the annual tax we pay in April, and is HST tax the one that some people pay quarterly?

[@jessicamoorhouse]

Income tax is the tax you personally pay to the CRA based on your income earned. HST is a sales tax you collect from customers and then remit to the government. Income tax must be filed annually but depending on your income, you may need to pay monthly or quarterly in advance of filing, instead of annually after you file your taxes. Also depending on your business you may need to file and remit HST annually, quarterly, or monthly.

[@Natureway-i8l]

@@jessicamoorhouse Thank you Jessica!

[@puneetsachdeva85]

Thanks a lot for making this video. To the point and informative. One thing I am extremely confused about and no one really answers clearly is this: If I work under my own name will I be able to get tax refunds for my expenses I do in my side hustle. For example: A New KZbin vlogger needs equipment and services/software to make videos. like a camera/mobile phone, high speed internet, and video editing equipment like a laptop and editing software. Would only a sole proprietorship/corporation be eligible to write off the expenses of purchasing the equipment and services/software in the tax returns or I could still write off those expenses if I am doing the vlogging under my own personal name?

[@jessicamoorhouse]

A side hustle, which simply means you are earning self-employed income and presumably also have a day job as an employee working under an employer, is a sole proprietorship. Therefore, you should be able to claim some business expenses that you accrue on your personal tax return. Here are a few articles that explore this a bit more www.moneysense.ca/save/taxes/audit-proof-your-side-hustle/ www.cbc.ca/dragonsden/m_blog/how-to-make-the-most-out-of-your-side-hustle-come-tax-season

[@puneetsachdeva85]

@@jessicamoorhouse Thanks a lot for your reply. Really appreciate.

[@jessicamoorhouse]

@@puneetsachdeva85 You're welcome!

[@nail_art8695]

How i register my small business in Manitoba

[@jessicamoorhouse]

You can find info here: www.gov.mb.ca/business/registration/index.html

[@themrs.1819]

I am registered as a sole prop (under my name, but i also have a business name) and I accept cheques under the biz name (not my personal name), will that affect any clients when they submit to claim my services at the end of the year?

[@jessicamoorhouse]

Not sure what you mean? If you've registered your business under a business name other than your personal legal name (i.e. XYZ Consulting) you should always be using that business name for any invoicing to clients.

[@taimoor1300]

Do u have to pay payroll tax if your are independent contractor

[@jessicamoorhouse]

Likely if you've been hired as an independent contractor, then it's up to you to pay your income taxes and the company you're working for won't deduct taxes or CPP from your paycheque. But I don't know your situation so it's important to discuss this with your company's accounting department.

[@emilyjensen2604]

This is amazing information! I have a question though (please anyone jump in, I am trying to get all the information that I can). I have been free-lancing as a baker as a side-hustle but now jumping into it full-time. However I have also been approached by a local cafe owner to work for them as an independent contractor for an hourly rate. On one hand the cafe would provide stable income and I would not have to calculate cost vs profit as they would supply all the equipment/ingredients/etc. On the other hand, I would still have to handle paying taxes, CPP, EI, etc. alone. Furthermore, any recipes or specifically "brandable" products that I create there would be sold under the cafe's name, not my own. Is it smarter for me to work in their cafe and invoice them as a vendor or sell the cafe products that I produce independently under my own brand name?

[@jessicamoorhouse]

First, I'd definitely suggest discussing your options with an accountant. They'd be able to look into your situation more closely and give you some specific advice. I'd also probably talk to a lawyer about setting up a contract with the cafe, just to protect yourself. But personally if I were in your shoes, I'd probably prefer being a vendor to the cafe to have complete control over my work, products, and recipes. I personally just prefer having more freedom (for instance, if you decide you no longer want to supply your goods to the cafe, you can stop and take all your recipes etc... with you to use elsewhere). If you're looking for an accountant, I use thewellthcompany.com/. For a lawyer, I use elenafavaroviana.com/

[@emilyjensen2604]

@@jessicamoorhouse Thank you so much for the advice and resources!

[@jessicamoorhouse]

@@emilyjensen2604 Happy to help!

[@aprildavidson1298]

Hi Jessica, thank you so much for this video !! Not sure if I missed it or if it wasn’t clear but just to be clear, once I register a business name, I do not have to register for a gst/hst number until I’ve hit $30,000.00 in a 12 month period correct??

[@jessicamoorhouse]

Correct! You can find more details about GST/HST registration here www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/when-register-charge.html

[@Stimpyfied]

Hello Jessica, I was curious. You said you do not need to register your business if it is under your personal name. If your business is not registered, but you invoice under your own name, are you still able to claim the tax benefits of writing off expenses? Thanks

[@jessicamoorhouse]

Correct. You'd claim your business income and expenses on your personal tax return.

[@Stimpyfied]

Awesome, thanks. Do you have to claim the income that year or can you defer it like of you had a corp (corp pays yourself next year for example)

[@jessicamoorhouse]

@@Stimpyfied No, you have to claim the income in the year you earn it. And even if you have a corp, you have to claim the income your corp earns in the year you earn it (and pay corp tax on it), but it's up to you when you want to pay yourself personally in the form of income or dividends or just keep it inside the corp.

[@Stimpyfied]

@@jessicamoorhouseawesome. Thanks!

[@DM-oy4wj]

I want to have more than one website with different domain names. Do I need to register the different names or can I operate under one name? All income would be paid direct to me under my personal name.

[@jessicamoorhouse]

You don't need to have separate businesses to own multiple websites or domain names. For example, when I was a sole prop I owned like 6 different website domain names (some just to park the domain so others couldn't take it) and had two websites (one for my brand and one for this event series I used to put on).

[@DM-oy4wj]

@@jessicamoorhouse Wow thank you for replying so quickly! And thank you for clearing that up for me.

[@Marina-mf6ig]

Your budget sheets are really helpful, thank you so much! So I guess what I'm finding confusing is I had to register a business number because I'm self employed(and had to start charging gst). I'm filing my taxes now and the program I'm using(genu tax standard) is asking for my business name which is annoying. So I'm inputting just my name. Hope this doesn't cause me issues later. If I were filing my taxes on paper by hand would I be able to leave this blank? :')

[@jessicamoorhouse]

You should just put your business name. If your business name is the same as your legal personal name, but that.

[@JesseKerrFishing]

Hi Jessica, at how much income do I need to start collecting GST/HST as a sole proprietor? Ontario Canada

[@jessicamoorhouse]

Great question and I go in-depth about it here jessicamoorhouse.com/sales-tax-in-canada-hst-gst-pst-self-employed/

[@douglaz2053]

Hey Jess, what's the Canada equivalent to an American LLC? I'm trying to open up my own audio production company

[@jessicamoorhouse]

There's no equivalent exactly. Your options for business structures in Canada are sole proprietorship, partnership, or corporation. www.bdc.ca/en/articles-tools/start-buy-business/start-business/advantages-different-business-structures