Question about income tax for home based business.

I started selling for Epicure Selections (a "home party" style business) last January. I have been looking on-line for guidelines regarding income tax for this style of business, but I haven't found anything. I don't find the CRA website very user friendly :yikes:

Does anyone else on here have any experience with one of these types of business (ie Avon, Tupperware etc)? I'm just not sure what I count as "income"...just my commission, or the product discounts I receive as well...I am so confused. If I just count my commission, I only made $930 last year.

When I try talking to my sponsor about taxes, all she can talk about is how she claims every conceivable thing as an expense and gets massive deductions (most of which I would never dream of doing).

Also, do I have to file a business return, or can I add this to my personal return. DH and I also have a rental property, and I think we file that income with our personal return (he takes care of it all...I am so clueless.)

Somebody please help me!!!

Hon, I think it's time for an accountant... You'd be better off all around. That way nothing will get missed - both in terms of what you owe, but also so you get all possible deductions available to you.

http://www.cra-arc.gc.ca/tx/bsnss/tp.../menu-eng.html

Information links for rental income and business income are shown. As you are working for yourself (self-employed as sole proprietor), you can file your income on your personal tax return. Sole proprietors have unlimited liability and thus if you ever had any supplier wanting to collect on monies owed by you, your property could have a lien put on it by the supplier.

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<!-- CONTENT TITLE BEGINS | DEBUT DU TITRE DU CONTENU --><!-- InstanceBeginEditable name="Main content title" -->Getting Form T2125<!-- InstanceEndEditable --> <!-- CONTENT TITLE ENDS | FIN DU TITRE DU CONTENU -->

<!-- InstanceBeginEditable name="Main Content" -->Form T2125, Statement of Business or Professional Activities, may be used to report either business or professional income and expenses (including self-employed commission sales).

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<!-- CONTENT TITLE BEGINS | DEBUT DU TITRE DU CONTENU --><!-- InstanceBeginEditable name="Main content title" -->Fiscal period <!-- InstanceEndEditable --><!-- CONTENT TITLE ENDS | FIN DU TITRE DU CONTENU -->

<!-- InstanceBeginEditable name="Main Content" -->You report your business income based on a fiscal period.
A fiscal period is the time covered from the day your business starts its business year to the day your business ends its business year.
For an existing business, the fiscal period is usually 12 months. A fiscal period cannot be longer than 12 months. However, it can be shorter than 12 months in some cases, such as when a new business starts or when a business stops.
Self-employed individuals generally have to use a December 31 year-end. If you are an eligible individual, you may be able to use an alternative method of reporting your business income that allows you to keep a fiscal period that does not end on December 31.

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http://www.cra-arc.gc.ca/tx/bsnss/tp.../fscl-eng.html

Rental income from a property can also be filed on a personal tax return--there is likely a form for expenses and income that you will complete to come up with the final numbers for the tax return. You won't be able to use a rental loss against other kinds of income--you'd have to carry the loss forward.

If you had chosen to file a corporate registration with your province and paid registration fees, you would need to file a corporate tax return and pay business tax rates. If you had over $30,000 in sales, CRA would want you to have a business account number with it for payroll and income tax deductions. Corporate registration means your company would have limited liability (only assets and liabilities registered under corporate name would be impacted by any supplier claims, not your personal property owned under your own name). So this would only be of interest to you if you get your sales up to a point that registration would help you tax-wise.

http://www.cra-arc.gc.ca/E/pub/tg/rc...e_selfemployed

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Originally Posted by RobynCD

Also, do I have to file a business return, or can I add this to my personal return. DH and I also have a rental property, and I think we file that income with our personal return (he takes care of it all...I am so clueless.)

Somebody please help me!!!

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Did you have to register as a business to start selling this? ie. do you have a business number? If you're a registered small business, I believe you simply file as part of your personnal tax return. I'd assume you would just count your commission as income. Do you use uFile or Quicktax to prepare your returns? If not, it's something to look into.

I was a PartyLite consultant for years and have been an Avon consultant for the past 4 years or so. I buy the small business version of quicktax and do a personal return.

Also, you only count your commission as income.

I used to do my self employed income using the regular quick tax. I did claim a portion of my rent/hydro ect.... as business expense as it was my home office.

My understanding (I'm no professional, but I have a larger than average interest in taxes) is that discounts are NOT considered income, they're discounts.

And I believe you have to file a T4002 as part of your personal return. http://www.cra-arc.gc.ca/E/pub/tg/t4....html#P98_1780