Do small businesses earning less than $30K a year have to file an income tax return?
Even businesses that have not officially registered their business because they earn less than $30,000 a year must fill out an income tax return. Any business income, whether earned as an employee, sole proprietor, partner, owner, freelancer, or contractor, must be reported. This also includes any income from other countries.
Which businesses must file a T1?
Sole proprietorships and partnerships use the T1 income tax return, as well as Form 2125, the Statement of Business or Professional Activities, which reports your business income. The T1 is also used by home business proprietors to report their income as well as independent contractors and freelancers. As long as the business is not a corporation, the owner fills out a T1 income tax return.
Which income tax return form do I use to calculate business income?
The T2125 form is designed to lead you through the process of calculating your "true" business income—that is, what's left when you've taken away your business expenses from the original amount you made.
How do I calculate my business income?
To start your calculation follow these steps:
- Calculate your total revenue.
- Subtract your business's expenses and operating costs from your total revenue. This calculates your business's earnings before tax.
- Deduct taxes from this amount to find you business's net income. Your net income will be your business income.
