If you’re self-employed, good for you! We firmly believe entrepreneurship to be one of the most rewarding and fulfilling journeys that a person can take.
You might not know this, but governments want to facilitate entrepreneurship and the creation of new businesses, and ours is no exception. There are multiple tax breaks our government gives specifically to you. You should be taking advantage of them!
For example, take a look at:
- Grab our Free Reports to find out how to save taxes and to accurately calculate your savings with an HSA
- 10 Best Tax Tips
(By the way, we heartily recommend that you establish a relationship with an accountant or tax advisor that knows his stuff, as this will be well worth it to you in the long run).
You might notice that one of the foremost recommendations is to incorporate your business. This way your business profits will be subject to an extremely low tax rate, and you’ll get all the benefits the CRA affords to small Canadian-based companies (and more besides).
There is another, lesser-known benefit to incorporating: Once incorporated, your business can establish a Health Spending Account. Simply put, the Health Spending Account allows you to claim your out-of-pocket medical expenses from your company, tax free!
Many families have around $3,000 per year in out-of-pocket medical expenses; with a Health Spending Account, claiming this $3,000 back from your business will save around $1,000 in taxes!
(If you wonder why, ask yourself how you would get $3,000 into your personal pocket in the first place. Your business would have had to pay you a salary or other income; but it would have had to pay over $4,000 in salary for you to end up with $3,000 after tax…)
See Canada’s Best-Kept Small Business Tax Secret for how the tax savings works. And yes, this is entirely legal and per the CRA’s rules, provided that you make use of a reputable provider.