Benefits of Self-Employment

November 25, 2018 Posted by Uncategorized 0 thoughts on “Benefits of Self-Employment”

The pros and cons of being self-employed.

Understanding the benefits and challenges will help you make an informed decision.

It’s always a good idea to weigh the pros and cons before making a major decision like becoming self-employed. Below, we look at both sides of self-employment and offer a few things you should think about before diving in.

What are the advantages of self-employment?

There are many lifestyle and financial benefits to being your own boss

  1. Flexibility in setting your own schedule.
  2. Ease of working from your place of choice.
  3. Unlimited growth opportunities as you are your own boss.
  4. You do not pay income taxes upfront resulting in short-term higher cash flow.
  5. No requirement to pay employment insurance (EI) premiums.
  6. A wide range of expenses that are deductible for tax purposes.
  7. Business losses are deductible against other income on your tax return. However, if you do not have other income you can carry such losses back (up to 3 years) or forward for greater tax benefits.

What are the advantages of self-employment?

There are a few hidden costs and responsibilities that come with all that freedom

  1. You are no longer eligible for employer benefits such as paid health insurance, disability, life insurance, tuition reimbursement and RRSP matching.
  2. Not all hours are billable hours. Time spent on marketing (such as building your website) and administrative tasks related to your own business cannot be billed.
  3. You may pay twice the amount of CPP/QPP premiums. Maximum CPP premium in 2018 for an employee is $2,593 and for a self-employed individual is $5,186.
  4. Collecting and remitting sales taxes.
  5. Time spent on bookkeeping, overhead, and administration.

The bottom line is if you want more control of your work and lifestyle, have an entrepreneurial spirit, and you embrace risk, then being self-employed is made for you.

Whether you’re just starting out or you’ve been self-employed for years, we have the right tools in place to help you achieve your goals and stay SORTED.

 


Prepared by : Nikhil Aggarwal, CPA, CGA PMP
Nikhil Aggarwal is a CPA, CGA and a Tax expert. He strongly believes in transforming obstacles into opportunities and loves working with businesses, entrepreneurs and individuals. He has over 10 years of experience in accounting, taxation and technology. He has a proven track record of delighting the clients by finding over $20 million in tax savings. Nikhil has also completed Canadian In-depth Tax Course, which is the most comprehensive tax training program in Canada.
This article offers general information only and is not intended as legal, tax, or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed.
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Sorted makes tax time easy for Self-Employed in Canada. Simply swipe to sort your business expenses, then get a summary of your business expense deductions. Plus know what sales tax you owe and when it’s due!


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