Entrepreneurship & Small Business

Freelance-Do i register a business?

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[OP]
Member
Nov 12, 2004
431 posts

Freelance-Do i register a business?

Hello to all,

I do freelance on the side for graphic design projects. Should I register for a business? Does registering mean I get a GST number? What is the best route for me? I just need to know the basic steps to start. Any help please.
Can I register a business name online?
17 replies
Newbie
User avatar
Apr 19, 2009
37 posts
Toronto, Ontario, Ca…
Hey, you will benefit more if you register a business because you'll be able to write off your expenses. You can register your business online, which actually saves you $20.
Deal Addict
User avatar
Dec 20, 2004
4541 posts
205 upvotes
Toronto
Yes you can register a business name online with the province of Ontario. The easiest and least complex way is to simply register your business as a sole proprietorship. Any income you make is added to your own taxable income (and you can deduct your own business expenses against this).
Sr. Member
User avatar
Jun 6, 2007
922 posts
11 upvotes
Toronto
sorry to bump into your thread but it makes more sense to post in here cos the context is similar.
i help various people (by helping with producing and whatnot) who cannot afford studio time to record, produce and edit from my home studio and other various locatuions.
I finally registered this as a business this year cos i seem to be doing it more than usual and find myself expending more of my time and funds in this goodwill.
can i claim things such as equipments, gas for travelling between these times and other expenses which i incur as a result of this practice even though i am not bringing in any income/revenue from it?


thanks
olddog
Stumbled upon RFD by mistake, best mistake of my internet life i must say...... :D
Deal Addict
Aug 21, 2007
4748 posts
222 upvotes
Markham
olddog wrote:
May 1st, 2009 12:27 pm
sorry to bump into your thread but it makes more sense to post in here cos the context is similar.
i help various people (by helping with producing and whatnot) who cannot afford studio time to record, produce and edit from my home studio and other various locatuions.
I finally registered this as a business this year cos i seem to be doing it more than usual and find myself expending more of my time and funds in this goodwill.
can i claim things such as equipments, gas for travelling between these times and other expenses which i incur as a result of this practice even though i am not bringing in any income/revenue from it?


thanks
olddog
No you wouldn't be able to. Reason for that is under tax rules (and the wording is probably a bit different), but the idea is that you should be operating with the goal and expectation of turning a profit. Since you are essentially donating your time/resources and are not looking to make money/profits you would not be allowed to deduct expenses against your income.
Deal Addict
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Jan 19, 2005
1498 posts
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If you're not anticipating maxing more than $34,000 or something (I think it was $34K, but double check that on government/CRA site) per year from this gig, you don't need to register a thing.

That GST number you register for is only if you anticipate making more than the minimum amount above (again, I think it was $34K), as then you'd have to charge GST to your clients as well, and report/pay that to the government.

And you don't really need to register a business or anything, as if you charge anything in your own name you are effectively operating as a sole proprietor and no paperwork/registrations is needed for that (unless, again, you're making more than $34K a year).

And you can claim ANY expense incurred as business expense as long as it was for a purpose of generating more business or in the act of performing your work. So, if you travel to and from potential clients, you can claim those expenses as business expense. Lunch with a potential client? You bet.

You get the idea ;)
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Jan 19, 2005
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adeel wrote:
May 1st, 2009 3:57 pm
No you wouldn't be able to. Reason for that is under tax rules (and the wording is probably a bit different), but the idea is that you should be operating with the goal and expectation of turning a profit. Since you are essentially donating your time/resources and are not looking to make money/profits you would not be allowed to deduct expenses against your income.
Correct and not.

He doesn't have to make any money out of the activity he is claiming the expense for, AS LONG AS his intention was to generate business (that day, in the future sometime, whenever) from that person.

And he can ride that train for a few years, until he's actually expected to show some profit (as running a business that's constantly declaring capital loss year after year will get some eyebrows raised after 3-4 years in the CRA office).

More info:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... u-eng.html
Deal Addict
Aug 21, 2007
4748 posts
222 upvotes
Markham
fantom wrote:
May 1st, 2009 4:06 pm
Correct and not.

He doesn't have to make any money out of the activity he is claiming the expense for, AS LONG AS his intention was to generate business (that day, in the future sometime, whenever) from that person.

And he can ride that train for a few years, until he's actually expected to show some profit (as running a business that's constantly declaring capital loss year after year will get some eyebrows raised after 3-4 years in the CRA office).

More info:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... u-eng.html
My wording was a bit off, but what I was basically trying to say was that you have to be operating with the overall goal of making money at some point, which it does not appear to be the case for olddog. I think that is what you are also saying, right?
Sr. Member
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Jun 6, 2007
922 posts
11 upvotes
Toronto
I do have the intention of turning this into a profit-making business in a year or so but for now, i olike to focus on organisations that support engaging children and young adults off the streets by rendering these services.
so yeah, while this is pretty much freelancing for now, the intent to expand it for profit-purposes are 100% there. But since i dont have the time to fully dedicate myself to it now, i want to engage myself in just freelancing for now.
So with that being said, I guess i can definitely right off a couple things i expend in this freelancing, right?
Stumbled upon RFD by mistake, best mistake of my internet life i must say...... :D
Deal Addict
Aug 28, 2007
1796 posts
218 upvotes
Calgary
I think you're using the term freelance incorrectly. It does not mean giving away your services for free. The word for that is charitable.

Freelance means you are not obligated to work for one source; you are free to sell your services to anyone. It comes from the middle ages where your "lance" would be available to fight for whichever baron was the highest bidder . Today we call those guys mercenaries and freelance is used in the context of photographers or journalists who don't work for a single newspaper or network. Another synonym is journeyman used in the context of trades.

But to your point, Yes you can deduct expenses for a few years as long as your intention is to make a profit in the future. It wouldn't hurt to get some paying customers sooner rather than later
Deal Addict
Dec 9, 2006
1254 posts
85 upvotes
I have a similar situation as the OP.

I believe I can run a business under my own legal name and do not need to register it or charge GST as long as it is under $30 000 in income per year. Am I correct in believing this? I am selling my time basically (consulting) so will I need to worry about PST? (Ontario resident)

What advantages are there to registering a business and separating out all of the activity of the business? I assume I would then add the GST charge to my customers and remit only a portion to the government based on what expenses were written off?

Can anyone confirm my assumptions and provide more details?
Jr. Member
Oct 8, 2006
129 posts
0
You do not need to register a business name. Your own name is essentially your business name. Registering a business will allow you to advertise yourself more professionally. You will also be able to open business bank accounts so you can keep your finances separate.

You only need to register a GST number if your sales go over the $30,000 limit by the end of the year. Technically you only need to start charging GST on the sale that puts you over the limit and all sales thereafter. But you can save yourself the trouble of remembering when to start charging GST and register and begin collecting GST before you even reach the limit. There is no harm in collecting GST even if you don't make it over the limit, you just have to remember to pay a portion of it back to the government. Being a GST registrant also allows you to claim GST input tax credits (you can read about those).

It is not too difficult to figure all this business stuff on your own, but I suggest that you find yourself an accountant that you will use for Income Tax preparation and one that can answer specific questions you will have. Best of all, you can write-off the accountant's fee as a business expense :cheesygri .

Bookmark this page:
http://www.cra-arc.gc.ca/tx/bsnss/menu-eng.html
Newbie
May 1, 2009
55 posts
Abbotsford
Another people need to understand is that "write offs" are not just "write offs" against your everyday income. They are against your business income.

If you have no business income, you have nothing to gain from that loss.

If you wish to carry that loss forward, you need to remember to keep filing your statement of business activities for that business each year.

Unless you are incurring thousands of dollars worth of losses, with proper documentation to back it up (which you probably don't) it probably wont be worth it to you.

Equipment you bought for yourself, is not a business expense. You need to have purchased it in order to generate income. And in any case, you can only claim capital cost allowance on it.

Gas receipts I would suspect would amount to a few dollars of savings at most. Literally, just a few dollars.
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Jan 19, 2005
1498 posts
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jmarco2 wrote:
May 10th, 2009 8:38 pm
Gas receipts I would suspect would amount to a few dollars of savings at most. Literally, just a few dollars.
you'd be surprised... ;)
Deal Addict
Dec 9, 2006
1254 posts
85 upvotes
Thanks a lot. Its been a big help. I'm still undecided which route I'm going to take since I'm just doing this on the side. There seem to be a lot of government programs that help people out with small businesses especially since I fit in so many categories (young/student/unemployed/disabled/low income) Not sure if any of these will be right for me yet though.

The hassle of putting together a formal business plan and doing all of the work to be part of one of these programs might outweight the benefits. I have two clients lined up and don't expect any others for quite some time. I don't have many business expenses so formalizing this seems like it is overkill especially if taking advantage of one of these programs. Except maybe if the assistance they offer (financially) will be large enough for me to expand my horizons which would make their mentoring assistance much more useful as well.

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