Behind every perfectly painted face on a billboard, in the pages of a magazine, or on television, is a makeup artist. From contouring tricks to colour theory, you know the latest techniques and have the newest products in the (makeup) bag. Whether working independently as bronzer-in-chief or as part of a glam squad, you make sure your clients put their best face forward. But are you just as confident claiming your expenses and credits come tax time as you are applying perfectly winged liner?
Generally, a freelance makeup artist is considered to be self-employed. You set your own hours, choose who you want to work with, and schedule as many jobs as you want—the beauty (pun intended) of being your own boss! There is flexibility in freelancing, but there are also responsibilities and obligations when it comes to filing your taxes as a self-employed individual.
As a rule, you can deduct any reasonable business expense you paid to earn income. Most tools and supplies in your kit (including brushes, disposables applicators, and your arsenal of products), union dues, agent fees, and even marketing costs are expenses. Transportation and other travel costs related to a job might also be deductible. Even fees to attend that coveted masterclass or a beauty-full tradeshow could qualify. And just as your clients call on you to help them look their best, you might want to consider hiring a professional to do your taxes, especially since you can claim the service fee as an expense.
Have an in-home beauty room where clients come to get dolled up? When you use part of your home for business, you may be able to deduct a proportionate amount of your household expenses. These include maintenance costs such as heat, home insurance, electricity, and cleaning materials. As a homeowner, you may be able to deduct part of your property taxes and mortgage interest. If you rent your home, you may be able to deduct the portion of rental fees that relates to your studio space. For more information, go to www.cra.gc.ca/smallbusiness, and select “Business expenses.”
Not sure if you need a goods and services tax/harmonized sales tax (GST/HST) account? Go to www.cra.gc.ca/gsthst and answer a short questionnaire to see if you need to register for one. Even if you don’t have to, you might benefit from registering so you can claim input tax credits on the GST/HST paid on your business purchases and expenses. In Quebec, Revenu Québec administers the GST/QST. If your business is located in Quebec, go to www.revenuquebec.ca.
No different than the compartments in your kit, it’s imperative to keep your paperwork organized. Stay on top of record keeping throughout the year to avoid stress at tax time. You need to keep complete records of business-related expenses to support your claim. Without supporting documents, the Canada Revenue Agency (CRA) could disallow the credit or deduction. Unlike mascara that has a short life span, you generally need to keep your supporting documents for six years from the end of the last tax year they relate to, in case we review your return. To learn more about keeping records, go to www.cra.gc.ca/records.
You’ve invested time to educate yourself, gain industry experience, and build your portfolio and brand. Don’t risk your reputation by providing services at a discounted rate for cash payments. Under-the-table deals undermine Canada’s tax system and deprive Canadians of funds to support vital programs that benefit all of us. If you participate in the underground economy, you place an unfair burden on all taxpayers and you put yourself at risk. If you’re caught evading taxes, you could face fines, penalties, or even jail time.
No need to cover up and camouflage your tax blemishes. If you ever made an error or omission, the CRA is offering you a second chance to correct your mistake through its Voluntary Disclosures Program. If you make a valid disclosure before you become aware that the CRA is taking action against you, you might only have to pay the taxes owing plus interest. Find out more about the program at www.cra.gc.ca/voluntarydisclosures.
Most Canadian income tax and benefit returns for 2015 are due on April 30, 2016. However, since this date is a Saturday, the CRA will consider your return as filed on time and your payment to be made on time if it receives your submission or it is postmarked by midnight on May 2, 2016. Self-employed individuals and their spouses or common-law partners have until June 15, 2016, to file their income tax and benefit returns, but any balance owing is still due no later than May 2, 2016.
Filing online is easy, secure, and lets the CRA process your return much faster. If you’re entitled to a refund, you can enjoy your money in as little as eight business days by combining online filing with direct deposit! For a list of software and Web service options, including some that are free for everyone, go to www.cra.gc.ca/netfilesoftware. Also, new this year, the CRA’s Auto-fill my return service is available through some NETFILE certified software. This secure service automatically fills in certain parts of your income tax and benefit return. To use Auto-fill my return, you must be fully registered for My Account at www.cra.gc.ca/myaccount.
While you’re visiting the CRA’s website, be sure to sign up for My Account. You’ll be able to track your return status, change your address, check your RRSP and TFSA limits, register for online mail, print proof of income, and so much more. To take advantage of this and other CRA electronic services, go to www.cra.gc.ca/electronicservices. On the go? Get the MyCRA mobile app and access key portions of your tax information wherever you are, from your mobile device.
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