Anyone have a Regular Job plus Sideline?

Wondering what the requirements are in relation to setting up, informing the government, tax deductions, etc. Anyone care to say how their setup works?

The sideline is not expected to make much money, will be more of a hobby/addition to the resume, but has the potential to make a little bit of money. It would be a partnership with my wife, we both have regular professional jobs with tax taken out of our pay cheques. There may be a very small amount of investment paid out of our own pocket but not much and it would be home based. I'm thinking at a minimum even without making any money we may be able to get some tax back from our regular income for part of the rent, etc.

You gotta report the income if there is any paper trail so if anything is written down/ if you wrote buddy a bill/ if he paid you by cheque or visa/if you gave him a reciept and you report it when you do yer taxes under other income

If you get cash … what cash?

Yup, I've done contract work on the side in the past.

The tax paperwork isn't difficult. Check Revenue Canada site for the self employed income schedule.

You don't have to collect GST if you are below a certain limit, check their site for details.

Just make sure you keep good records of your costs and expenses in case you get audited.

Keep all your reciepts, keep all your bills. If you are a sole proprietorship, there is no formal paperwork so long as you declare your income as business income on your tax returns. Learn about all the tax deductions you can make for things you use in your business (interest on home, all your rent, utilities, maintenance, use of car, fuel, etc). Keep an auto log and all fuel, maintenance receipts if you do use your car. Most things used completely or partly for business can be tax-deductible (clothes and shoes are one exception - so tools, electronics, books etc are allowed.)

If you plan to make more than $30,000 you are supposed to charge HST/GST (I think this got raised recently). If you are not sure, get a HST/Business number from CRA. If you do happen to make over $30,000 you are on the hook for the HST amount, even if you did not collect HST.

You can't claim business losses from your other income, but you can apply a loss in your business in one year to a profit in a future year of the same busines, therefore reducing your taxable income. So file a tax claim even if you made no money. But if you make no money year after year, CRA will probably be suspicious. Your business should exist for the ultimate goal of making a profit.

You should get a book or read all the CRA literature regarding small businesses in Canada. Welcome to the world of self-employment.

When I had my own biz several years ago, I paid an accountant about $200 or so to help out with my first tax return. It helped a lot with showing me how to fill out all the schedules and paperwork, so didn't need the service again. Well worth it, IMO, points out a few things you probably won't think of on your own.

Kn.

You can't claim business losses from your other income, but you can apply a loss in your business in one year to a profit in a future year of the same busines, therefore reducing your taxable income. So file a tax claim even if you made no money. But if you make no money year after year, CRA will probably be suspicious. Your business should exist for the ultimate goal of making a profit.

You should get a book or read all the CRA literature regarding small businesses in Canada. Welcome to the world of self-employment.

Just starting to read through that but it is not obvious how it works if you have a regular income and a separate smaller income, are they declared separately on different returns? from what you say, sounds like you can't write expenses for the sideline off against regular income. Sounds like an accountant might be the way to go at first anyway.

Just starting to read through that but it is not obvious how it works if you have a regular income and a separate smaller income, are they declared separately on different returns? from what you say, sounds like you can't write expenses for the sideline off against regular income. Sounds like an accountant might be the way to go at first anyway.

Employment income from all sources is combined. Deductions are made against combined income.

Make sure your deductions are reasonable. Having to deal with an audit is a major pain.

Just starting to read through that but it is not obvious how it works if you have a regular income and a separate smaller income, are they declared separately on different returns? from what you say, sounds like you can't write expenses for the sideline off against regular income. Sounds like an accountant might be the way to go at first anyway.

Definitely NOT separate returns unless you incorporate. Just different forms and blanks to fill in on your personal return.

Kn.

Like hell Im reporting any work I do on the side.

Like hell Im reporting any work I do on the side.

Quoted for Revenue Canada's records. ;)

Just starting to read through that but it is not obvious how it works if you have a regular income and a separate smaller income, are they declared separately on different returns? from what you say, sounds like you can't write expenses for the sideline off against regular income. Sounds like an accountant might be the way to go at first anyway.

The employment you earn from a paycheck with income tax, CPP etc deducted is called "Employment Income" by CRA. "Self-employment" income is whatever you earn form your business activity and is filled out on a separate form that is part of the basic CRA tax package. So you would typically declare it as "Business Income" in the "Self-Employment Income" sheet (there are also separate categories of Self-Employment Income for professionals (lawyers, doctors, dentists etc), fishermen and farmers).

On this separate form in the tax package you declare your business income and business expenses. You can deduct expenses for a business from your Business Income, but NOT Employment Income. Business/Self-employed Income is not Employment Income. You are taxed on the net combined Employment and Business Incomes, but you can only deduct Business Expenses from Business Income. If you have more expenses than you earn from your business (ie you run a business at a loss) you cannot deduct the loss from your Employment Income. You can forward the loss to next year and claim it against your next year's self-employment income (assuming you make a profit - CRA may get pissed if you claim loss after loss after loss and never make a profit from your Business Income - I think you can forward losses 2 or 3 years). Anyway, as someone suggested, if it does get complicated, hire an accountant for at the first year.

Like hell Im reporting any work I do on the side.

cash is king as they say if, you get cash there is NO paper trail so always ask for cash or trade something when you are negotiating with buddy about how much ? Otherwise it might be a good idea to report in case whomever you got the cheque from gets audited,most legitimate business people do not want to pay you cash … it can't just disappear form their books

besides my normal day job as a ski bum I do whatever short term outdoor labor/tech work that comes along which I always claim in other income which means I usually have to write a cheque to rev can which is fine with me … it means I got their money

I always ask to be a contractor and all I really want is for them to pay WCB, its easier for whomever is hiring me so they can pay me more, I asked GF what beibng the employee vs the contracter is worth and she answered without missing a beat 13.56% plus they don't have to do paper work cuz they don't have to make you an employee or any of that shit , and so you should get yer money quicker, the last guy gave me an extra 25% a day [HTML_REMOVED] just wrote me a cheque as I was driving his truck home … no waiting or bulshit

A couple of years ago rev canada asked for details thinking I had a serious business or SFT, I just wrote them back that it was all short term fee for service and listed half a doz jobs I did that year …they never bothered me again

A few years ago I had a choice between billing my employer or going on their payroll. I had a GST number from years ago when I consulted in Ontario, so I thought I would revive it and set myself up as a sole-proprietor again. But I couldn't get a WorksafeBC number as they told me I needed more than one client to get a number as a sole-proprietor. I thought that was a little annoying…how do you start up doing small little contracts if you need more than one client at the get-go? (or did I misunderstand things…)

But I couldn't get a WorksafeBC number as they told me I needed more than one client to get a number as a sole-proprietor.

I don't think they can enforce this (I know someone who has Worksafe BC and derives 90%+ of their income from one client). You have to start somewhere - and that would be with one client. What they want to avoid is you paying Worksafe BC premiums for what in all-but-name is your full-time employer. Employers pay payroll taxes. As an SP, you avoid most of these (except some CPP). If you could hook up or attempt to hook up some other work on the side, you should be fine. Didn't you tell them that you were in the process of "lining up other clients"? I didn't need Worksafe, but would go through long stretches living off of one client and do little jobs on the side partly to make it all look legit. The only way the government could find out if you had more than one client is if your tax return was audited. You don't declare your sources of business income separately, unless, in theory, you have one company/proprietership for each client because each client is in a different industry/field of work (eg plumbing and automechanics - but if that was me, I'd make them the same to save work, time and paperwork).