A question about being self-employed

[Just Confused]

The first thing to know is - unless you're IBM or Microsoft or some large entity like that the same revenue and expense (and tax) principles apply for Sole Proprietorships and Corporations. Most people jump to incorporating too quickly.

I would debate that and ask "why not incorporate?". Aside from a few hundred bucks and some trivial paperwork there is no downside. Making an incorporation into a big deal is a mistake. Open one, try out business idea, if it flops, close it. It takes more effort to buy a pair of trousers. You mention a few items that make it more favourable tax wise; I agree with those. But there are a number you don't mention that are financially more beneficial as a corporation.

raptorfan - I'm out of T.O., so I don't have a local accountant for you, but please follow up and find one!

I run a small business that is reasonably profitable and I've always paid very little tax - usually in the neighborhood of %15-%20...

When I finally went to an accountant a few years back, my first bill was for $3000 - I do low volume/high dollar value business so I don't have that much in the way of "sales" paperwork. I was a little shocked, but she went back over my records for the previous 4 years and found me some $20000... easily paying for her work and keeping my tax to nice levels! I now seem to average about 2-3% lower then when I did it myself which more then makes up for the yearly bills - and I make more money now then I did before!

I agree. My accountant easily saves me more money than I pay him every year. I've never paid over 15% total tax, and most times closer to 12%. You should look around for an accountant who is more aggressive. I'd say you're probably eligible for more deductions. If you're paying 5 digit taxes and you're a student; either your software is very lucrative source of revenue (+$100K) or your accountant is too timid.

How could you write off your healthcare and your child's daycare expenses from your business?

Healthcare deduction is 100% through a PHSP (sole prop or corporation)... anybody in business and not using one is giving free money to Stephen and his merry band of bozos