T2125 Self Employed, Business, Professional, Partnership & Joint Venture

This page is a compilation of what I've learned you need to know about when you are self-employed.  I've been self-employed for over 26 years and wouldn't have it any other way.  Welcome to my world.

When do you have a business?
RC4070 Guide for Canadian Small Business
T4002 Business & Professional Income 2009
What is a Business?

Commercial activity: Any business, adventure, or concern in the nature of trade carried on by certain persons, but does not include the making of exempt supplies.

It also includes the supply of real property by any person, other than an exempt supply, and anything done in the course of making the supply or in connection with the supply.

A commercial activity does not include any business or adventure or concern in the nature of trade carried on without a reasonable expectation of profit by an individual, a personal trust, or a partnership where all the members are individuals.

IT 457 Election by professionals to exclude WIP

Paragraph 34(a) does not require a special form to be used for making an election. The election in respect of the particular designated professional business(es) may be made by either attaching a letter to the taxpayer's return of income stating that the election has been made in respect of that business, or clearly indicating in the financial statements or in an income reconciliation submitted with the return that the election has been made. Where a taxpayer is electing on behalf of the members of a partnership the taxpayer should either attach a letter to the return of income stating that the taxpayer has the authority to elect for the partnership or include a note to that effect in the financial statements.

Business Structure
Joint Venturers
T4068 Guide for T5013 Partnership Info Return
Accrual or cash?
Accounting methods

Accrual: With this method, income is reported in the fiscal period it is earned, regardless of when it is received. The expenses are also deducted in the fiscal period they are incurred, whether they are paid or not. This method is generally used by businesses or professionals.

Cash: With this method, you report income in the fiscal period it is actually received. Similarly, expenses are deducted in the year they are actually paid. Farmers, fishers, and certain salespeople who work on commission may use the cash method.

Business expenses
Prepaid Expenses and Deferred Charges
IT 473 Inventory Valuation
Cash Basis
Commission sales (if accurately shows income/year)
IT 433 Farming or Fishing - Use of Cash Method
Affiliations, dues, memberships, subscriptions
IT 211 Membership Dues-Assoc & Societies
IT 148 Recreational Properties & Club Dues
IT 158 Employees' professional membership dues
Office of the Superintendent of Bankruptcy Canada
IT 490 Barter Transactions
Business education
Canada Business Network

Check for the office your province/territory

Changes to your business
Industry Canada
Business licences

Expanding to every community by 2010. BizPal is coming to your town soon. 

Industry Canada has teamed up with the provinces, municipalities and townships to bring you bundled compliance registration. 

Home office business licences, parking regulations, sales tax, those are just a few of the rules and regulations you will encounter when establishing yourself as self-employed.

Capital Assets
Links to various CCA Classes
Communication skills
Consumer protection
Deceptive advertising and pricing: Industry Canada
Canadian Consumer Gateway
Cost Allocation
IT 206 Separate businesses
Credit and collections
Canadian Consumer Gateway
Business Practices & Consumer Protection Act 2004
Canadian-Money-Advisor: Consumer Protection
Employment standards
Who has to comply with FINTRAC?

Everyone is required by law to be aware of the Proceeds of Crime, Money Laundering and Terrorist Financing Act administered by FINTRAC. 

Some business's are required to review the website quarterly for What's New and document their compliance with this requirement.Some specifically mentioned business's that must pay attention and review for What's New include Accountants, Notaries, Casinos, Dealers in previous metals or stones, Financial entities, Life insurance, Money services, Real Estate, Securities Dealers,

Even the General Public must be aware that business's are required to know their clients and require ID.

Compliance Questionaire - Accountants
Growth & Change
Selling a business
Business ceases: depreciable ppty: See Para 8

See paragraph 8 about change in use and deemed disposition for depreciable property.

RC4022 GST/HST Guide

See page 13 for a documentation requirements/receipt thresholds for ITC claims

Quick Method
How to calculate your ITCs
Home office
Business use of home

This is a whole webpage on this site

Incorporated Employees
Personal Services Business

Incorporating as an employee can be a tax trap

Industry Canada
Copyright, trademark, weights and measures...

You will be astounded.  Industry Canada is much more than copyright , trademarks and weights and measures...

Personal Optional Protection: WorksafeBC
T4002 Business & Professional Income
IT 457 Election on WIP Professionals
ITA S. 34 WIP election specifics
IT 287 Sale of Inventory
IT 473 Inventory Valuation
IT102 Conversion of property...from or to inventor
Keeping records, electronic record keeping
Obligation to keep records
Keeping records
Employee benefits & allowances
Paying your Taxes
P110 Paying your Income Tax by Instalments
Personal vs Business
Employee or self-employed?
CRA has this list: specific employments
How CRA determines if a realtor is self-employed
Guide RC4110 Employee or Self-employed?
If you aren't sure, get a ruling on CPT1
Provincial Sales Tax
T2125 Form Completion
T2125 Statement Business/Professional Activities
Completing T2125
T2125 Industry Codes
IT 457 Election by professionals to exclude WIP
Time management
Important dates for Businesses
Unusual Tax Credits
T2038 (IND) Investment Tax Credit Individuals
Motor vehicle records
Travel logbook

Deziel v. The Queen TCC 2006 service vehicle / no log but reasonable claim given the facts

Hasham v. The Queen 2006 TCC 491 travel between home office (registered as corporate office) and other office

Diaz v. The Queen 2009 TCC 114 without logs, not reasonable claim

Mandatory for Quebec residents effective January 1, 2005.  Employees must give logbook to employer no later than 10th day of following year, lack of compliance $200 penalty.

Voluntary Disclosures
Fines when federal tax evaded plus tax & interest
Workers Compensation
Policy on Travel for POP See Ch 3 Policy 14/21
Free Employers' Assistance with WorksafeBC
Year End
Change of fiscal year-end
RC4015 Reconciliation... for Alternative Year Ends
Accounting & Legal
IT 99 Legal and Accounting Fees
Current vs Capital
Current or Capital
GI-019 Newspaper carriers

Working for yourself is freedom from having a boss, diversification at it's best. In exchange, welcome to compliance with government regulations and red tape galore.




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