Self-employed workers: What working for yourself entails

Working for yourself means being your own boss. If you are self-employed, your income is made up of your profits and losses and you are required to report it all when you do your personal taxes. If you're an employer, you also have to manage source deductions, contributions and premiums that apply to your employees. You may also have to register for the GST/HST and QST files with Revenu Québec. This page shows you the right way to get things done.

Carl is self-employed and starting a sole proprietorship

At the beginning of the year, Carl decides he wants to be his own boss. He starts his own Web design business and spends the early months meeting with current and prospective clients.

Six months later, he sees that his sales have increased and decides he needs help. He hires an employee, who tells him that the business’s financial statements will need to be submitted along with Carl’s tax return.

Feeling like a victim of his own success, Carl is overwhelmed by the tax obligations that come with higher sales volume, hiring an employee and preparing the business’s financial statements. He wonders if there’s somewhere he can go for help.

Lucky for Carl, Revenu Québec has an assistance program to help small and medium businesses (SMBs) and people starting out in business meet their tax obligations. Through the program, he can:

  • better understand his rights and tax obligations
  • get information on the credits and refunds he may be able to claim
  • get help registering for and using Revenu Québec’s online services
  • get answers to his questions
  • request an optional cursory review of his books and accounting records
Q&A — Carl
  • When does Carl have to include the GST and QST on his clients' bills?

    Carl doesn’t have to collect the GST or QST when he bills for taxable services until his business is registered for the GST/HST and QST. He will be required to register when his taxable sales exceed $30,000 in a given calendar quarter or cumulatively over the four previous quarters. If he wants to learn more about the requirement to register for the taxes, he can call Revenu Québec or visit the Revenu Québec website.

  • What are Carl's tax obligations as a new employer?

    Everything Carl needs to know is on Revenu Québec’s website. He can learn more about his responsibilities as an employer, such as how to register for source deductions, which tax slips he needs to file at the end of the calendar year and much more. The forms, guides and tools he’ll need are all available in the same section of the website to help him with his new role as an employer.

  • What is a fiscal period?

    A fiscal period corresponds to a period of no more than twelve months, at the end of which a business prepares its financial statements. As a rule, fiscal periods run from January 1 through December 31. Your fiscal period must end on December 31 for your Québec income tax return. However, if you elect to have a fiscal period end on a date other than December 31 for your federal income tax return, you must use this same date for your Québec income tax return.

  • Are there any tools that Carl can use when preparing his business's financial statements to figure out his business income and expenses?

    Since he’s self-employed, Carl is required to report his income and submit his business’s financial statements with his income tax return. To make it easier, he can use form TP-80-V, Business or Professional Income and Expenses, a form provided by Revenu Québec to help self-employed workers like Carl prepare their business’s financial statements.

  • How long does Carl have to keep business-related documents?

    As a rule, records and supporting documents must be kept for 6 years after the last taxation year they apply to. In some cases, it may be longer.

    Learn more
Are you in the same situation as Carl? Here are some tools that can help you.

Amelia is self-employed and does her own taxes

Amelia has been in a relationship for a few years now and has no children. She recently decided to work for herself as an IT consultant. She bought all the furniture and equipment she needs to set up a home office for her business.

She set up a filing system for her business records and supporting documents and registered her sole proprietorship for the GST/HST and QST with Revenu Québec. She uses commercial software to prepare her business’s financial statements and doesn’t have any employees.

Soon, it’ll be time for her to do her taxes and report her business income. She isn't sure how to get started and wonders if there are any tools out there to help her.

Amelia will be happy to learn that Revenu Québec has an assistance program to help SMBs and people starting out in business meet their tax obligations. Through the program, she can:

  • better understand her rights and tax obligations
  • get information on the credits and refunds she may be able to claim
  • get help registering for and using Revenu Québec’s online services
  • get answers to her questions
  • request an optional cursory review of her books and accounting records
Q&A — Amelia
  • How should Amelia calculate the deductible expenses related to the space in her home she uses as a home office?

    Since Amelia is self-employed, and as long as she meets the conditions, she can deduct expenses related to using space in her home as a home office. She must also choose a reasonable way to determine the percentage of her home’s total surface area reserved for her home office.

  • How should Amelia calculate her deductible expenses related to using her personal car to meet with clients?

    Amelia can deduct some of her expenses related to using a motor vehicle, but she’ll first need to figure out the percentage of business use for the vehicle. To get the percentage, she needs to determine the ratio between the number of kilometres travelled for business purposes and the total kilometres travelled in the fiscal period.

  • Why are meal and entertainment expenses reported separately in Amelia's tax return?

    There are two reasons. First, 50% of eligible meal and entertainment expenses can be deducted. Second, there is usually a limit for meal and entertainment expenses based on a business’s annual sales.

    Learn more
  • How can Amelia account for the home-office furniture and equipment purchases she made?

    Any equipment Amelia purchases for her business is generally considered capital property and she may be able to claim capital cost allowance (CCA) for it. Also, since her business is registered for the GST/HST and QST, she can claim an input tax credit (ITC) and input tax refund (ITR) for the GST/HST and QST paid or payable on the equipment.

  • What are "instalment payments" in reference to income tax?

    Even if she is self-employed, Amelia still has to pay income tax every year. Instalment payments are partial payments self-employed people make during the year to pay income tax, and, if applicable, contributions to the Québec Pension Plan and the health services fund, and premiums payable under the Québec prescription drug insurance plan and the Québec parental insurance plan.

    She also has to report consumption taxes (in Amelia’s case, this means the GST/HST and QST). If her reporting period is annual, she may be required to make quarterly instalments.

  • What are the key dates that Amelia needs to remember for filing her return and, if she owes income tax, paying her balance?

    The deadline for filing an income tax return is April 30. Since Amelia is self-employed, though, both she and her spouse have until June 15 to file their returns, even if her spouse is a salaried employee. However, the deadline for paying any income tax due is still April 30, after which interest is calculated on the unpaid balance. Note that if Amelia or her spouse received COVID-19 assistance and their taxable income is $75,000 or less, no interest will be charged until May 1, 2022.

    Recently announced relief measures are in effect for this tax season. To learn more, refer to the COVID-19 FAQ for individuals.

  • What is the fastest way for Amelia to file her tax return?

    If Amelia files her return online, it will be processed faster, because some of the steps (such as mailing and manual processing) are eliminated. Also, Revenu Québec gives quick confirmation when returns are received online.

  • How can Amelia pay her income tax?

    If Amelia owes income tax, she can easily pay it:

    • on her financial institution's website
    • in person at a financial institution or at an ATM
    • by mail

    If she can’t pay all of her income tax on time, she can make a payment agreement with Revenu Québec.

  • How can Amelia check the status of her return and find out when she'll get her refund?

    All she has to do is log in to My Account for individuals or use the .

Are you in the same situation as Amelia? Here are some tools that can help you.