For many freelancers, whether they’re new to the game or seasoned pros, we know that tax season can be a heightened time of stress. Here at Gig Marketplace, we want to remind you that tax season doesn’t have to be so overwhelming. In this blog, you’ll find resources and strategies that you can implement to help you prepare for this mandatory business task each year and reduce your stress in the process.

Tax season in Ontario is important because freelancers are responsible for managing their own taxes, unlike employees who have them automatically deducted from their paychecks. The challenge comes from tracking income, expenses, and figuring out the best way to file taxes for your specific business needs and requirements. The complexity of deductions and understanding various tax credits that you can claim can also be daunting. You may find it overwhelming to stay organized while juggling multiple clients, however, we’ve put together a list of helpful tips to make your businesses tax season less stressful:

1. Stay organized:

Keep track of all invoices, receipts, and business expenses throughout the year. Many freelancers use spreadsheets to record, track, and organize themselves consistently throughout the year. Don’t worry if you don’t have this setup for the 2024 tax season, this is a great time to start implementing these practices at the beginning of the 2025 tax year.

2. Use tax software:

Tax software like QuickBooks or TurboTax can simplify filing and help ensure you don’t miss any important deductions. QuickBooks and TurboTax offer a “Basic” or “Self-employed” version of their software that is targeted to freelancers and is more cost effective.

3. Set aside money for taxes: 

Put aside a percentage of your earnings each month to avoid surprises when tax time comes. It is often recommended that you set aside 25-30% of your business income for tax season. This amount will help you cover both the federal and provincial income taxes as well as your Canadian Pension Plan contributions. As freelancers, we are responsible for setting this money aside, unlike employees who have these taxes and contributions automatically deducted from their pay by their employer.

4. Be aware of your HST threshold:

In Ontario, one thing freelancers should keep an eye on is the CRA HST (Harmonized Sales Tax) threshold. If your business earns more than $30,000 in revenue over the last four consecutive calendar quarters, you’re required to register for HST. This means you’ll need to charge clients HST on your services, and in turn, you can claim back the HST you pay on business expenses. It’s a key threshold that can sneak up on freelancers, so it’s important to track your earnings carefully. If you’re close to that $30,000 mark, it’s a good idea to stay on top of your numbers, as failing to register could result in penalties. However, if you’re under that amount, you don’t need to charge HST, but you still have the option to voluntarily register, which could be beneficial depending on your expenses.

5. Learn about tax credits and deductions:

Explore credits for home office, transportation, and business-related expenses to lower your tax bill. Follow this link to the CRA website to learn more about what credits and deductions you should be aware of.

6. Consider hiring an accountant:

If it’s in your budget, getting professional help can make a big difference, especially with more complex situations. We have freelancers on Gig Marketplace who could support you with accounting and bookkeeping services. Or alternatively, you could work with a tax preparation company such as H&R Block. H&R Block and support freelancers with the following services:


o Providing professional tax preparation and filing services, especially for self-employed
individuals
o Offering online tax software that guides you through freelancer-specific tax situations.
o Assisting with HST filing if you’re registered.
o Providing tax advice and planning support throughout the year.
o Offering audit support if necessary.
o Making sure you don’t miss out on important deductions, like home office, or vehicle
expenses.

In conclusion, handling tax season like a boss comes down to staying organized, using the right tools, and making informed decisions. Whether you’re tracking income and expenses, setting aside money for taxes, or exploring tax credits and deductions, taking a proactive approach can help reduce the stress of tax season. Don’t forget that professional help is always an option if you need it. With these strategies, you’ll be able to manage tax season with confidence and focus more on what you do best—growing your freelance business.

If you have any additional questions, or if you would like to discuss any of these items with one of our Gig Lab coaches, you’re more than welcome to attend the Gig Coaches open office hours every Friday at
_.