Tax Season For the Self-Employed
This year the deadlines for filing your 2017 tax return are as follows: April 30, 2018 for personal returns and June 15, 2018 for self-employed persons. Keep in mind, however, that any tax owing must still be paid by April 30, 2018.
Though there are many benefits to being self-employed, there are additional responsibilities that should be taken into consideration throughout the year to avoid issues when it comes to tax season. What may have been done for you when you were employed is now your responsibility.
When you are self-employed, all money received from sales and work completed comes directly into your account. Although these funds look great on paper and can line the pockets quite nicely, it is important to remember that business expenses will come out of this. Once you have paid business expenses and remitted required payments to the Canada Revenue Agency, leftover funds are what can be used to build the business or pay personal expenses.
Like all budgeting rules, bills need to be paid first. The same rules apply when you are self-employed. Paying your business expenses and staying current with CRA requirements are very important and should be made a priority.
As a self-employed professional, it is important to know and understand your business-related responsibilities. We often deal with very talented individuals who are unaware, or haven’t fully researched, the CRA requirements they are responsible for adhering to. This oversight can often result in a balance owing to CRA.
There are several reasons someone might owe money to the CRA. Perhaps you neglected to pay tax, or were unaware that you were required to pay tax, on your gross income earned. On the other hand, you may be aware of your debt owed, but are apprehensive about filing because you’re unable to fulfill the financial requirements at this time. If you owe money to the CRA, it is often the monetary penalties and interest that makes the problem of an owing balance even more difficult to manage. To avoid financial difficulties in the future, ensure you file your taxes on time. This will also mitigate you having to pay any additional and unnecessary fees or penalties.
Don’t Avoid the Tax Man
If you are struggling to keep on top of those pesky administrative responsibilities, it may be worth considering hiring someone to help. If this is something you cannot afford, then it is certainly important to familiarize yourself with all your responsibilities and CRA requirements.
Choosing to avoid the tax man altogether can cause many problems down the road. This includes the CRA deducting the amount owing from future credits you are entitled to, the beginning of collection calls and the garnishment or seizure of your bank accounts.
If you have found yourself struggling with budgeting your business and are in more debt than you can handle, consider setting up a free, no-obligation consultation with one of our trustees. We will discuss all options with you and together we will come up with the best solution for your situation.