Tips to Compute Your Taxes for The First Time
If you are self-employed and are giving it a thought to opening your account of doing your taxes, there are some tools to work out the outstanding amount of money in the form of CRA taxes. Here are the best Canadian tips for the calculation of taxes.
Your Best Bet to Estimate Your Taxes
Regardless of whether you own a small business or are self-employed, there is good news for you. Now, you can minimize the outstanding taxes towards the conclusion of a year by filing a claim for the expenses.
Proper planning will help you streamline the process. Note down your yearly expenses on a spreadsheet and keep it handy so you can use it whenever the need arises.
If you work in an office, your expenses may include advertising expenses, inventory and supplies. In the event of working from home, you need to deduct a percentage of your utility bills and rent.
Having a system in place to monitor your invoices can be of profound importance. If you wish to record the information in a spreadsheet, you can use popular options like Quickbooks and Freshbooks.
After adding up the amounts in the last year, deduct both your expenses and RRSP contributions prior to March 1 of the same tax year. By following this process, you will be able to work out your net income based on which, you can calculate your taxes.
You can further ease your tax burden by claiming certain other deductions. However, the deduction of your expenses plus RRSP contributions will keep you posted with the actual balance you owe to the CRA.
How You Can Calculate Your Taxes
Though the internet abounds with tax calculators, the catch is that they calculate the taxes in the same way as it is done in case of a salaried employee. If you are self-employed, chances are you might not like it to be calculated that way.
Do not forget to take your previous year’s income into account while getting the estimate of your CRA taxes.
If you wish to figure out the taxes without using a tool, bear the following things in mind:
a> Taxes are calculated only on the amount of money which exceeds $11,635 from the earnings of the previous year
b>Federal taxes are charged at 15% on $46,605 of your income
c>For income generated up to $55,900, self-employed Canadian individuals are required to contribute 9.99% to Canada Pension Plan. For the residents of Quebec, it is 8% on earnings up to $55,900
For queries on the ins and outs of CRA taxes, get in touch with our business advisors in North York Ontario.