How to manage money when you are self employed Immigrant
Starting your own business can be costly, but so can mistakes when it comes to money and tax. Avoid the pitfalls by following this advice.
As yourself, can I afford to set up a business?
You need to make sure that you calculate how much it is going to cost to start up and run your business to ensure that you have accurate figures in your business plan, especially if you’re applying for investment from third parties.
All costs need to be recorded for reporting to Canada Revenue ( even if you are a limited company or a certain type of partnership).
Here is a guide to costs you may incur when setting up your business:
Business planning, Registrations, Permit and Licences
Insurance , set up and location, employee, payroll and taxes
For more please check this link:
Information on planning, starting and growing your own business
Canada Revenue recommends that you keep the following records, which will help you to fill out your tax return:
invoices and receipts;
electronic sales records or till rolls;
P60s (if you are also employed);
payroll records (if you have employees);
hire purchase records;
an inventory of stock on hand;
a record of money taken out of the business for personal use.
So what do I need to know now that I have to pay self-employment taxes every year?
Each year, depending on the number of people I provide my services to, I need to collect finantial statements at the end of the year to file my taxes. Learn about Federal and provincial taxes of the contracting world and in order to avoid an audit, you need to make sure you report exactly what is on that form.
Now that you started the year as a contractor, you should probably pay quarterly taxes rather than wait until the end of the year. If you think it’s a good idea simply to pay a year’s worth of payroll, federal and provincial income taxes once a year, think again. The CR will levy a
severe underpayment penalty for holding on to its money the entire year. Payments are to be made April 15th, July 15th, October 15th and January 15th (The January payment will be in the following fiscal year).
Owning my own business, you will be keeping your eyes and ears open for every possible deduction to minimize the new taxes that you now need to pay. Previously, the standard deduction was all that I needed but those days are well behind me.
Somehow, you need to realize that every check you receive for you work is not 100% yours to keep. A good chunk of that belongs to the government, so in order not to spend everything I make, I’ve decided to set aside an online savings account specifically for payment of CR taxes. Four times a year, you will take money out of that account to pay my estimated taxes the other days of the year, that account does not exist! Self-Employment taxes can certainly be a drag if you’re just getting started in a new business and have never heard of them before.
But when you’re 65 and reaping the benefits of social security (reaping may be exaggerated and that’s assuming there’s anything left that far in the future) you won’t be as upset that the CR made you pay it.