5 Year-End Tax Tips for Canadian Solopreneurs

Hello. It's hard to believe that 2025 is almost over and we are quickly approaching a new year. And of course it's a very busy time for many people and your small business finances aren't necessarily top of mind. But there are some things that you can do to make the new year much smoother and potentially save some time and money. So in this video I am going to share five tips to help you do exact that. My name is Ronica Canna. I am a cpa, CFA and the founder of Montreal Financial, where you can find lots of resources for your small business and I encourage you to sign up to my newsletter. Okay, so tip number one, you should @ least organize your finances and look ideally you should be doing your accounting regularly, monthly or weekly, but not all of us do that, including myself. But there are some things that you can do, especially now to make sure that you're set up in terms of organization. And the first thing you want to do is make sure you have an accounting folder on your computer where you save all of your invoices, bills, receipts. You can scan your receipts or you're probably receiving a lot of documents online and all of those can be saved in the accounting folder. The other thing that you want to do is to make sure that you have all of your bank and credit card statements that have your business expenses on them. And if you do not have a separate bank account or credit card for your sole proprietorship, I highly recommend setting one up. This is really, really important. But regardless, you should save those statements, download them from your bank, and again save them in the accounting folder. Additionally, you should review if you have any client billing to do at the end of the year and make sure you get those bills out. This is a good time to do it. And that way you can close off the year knowing that you have billed for all of your work. And if you use your car for business, it is really important. Put a note in your calendar to record your odometer reading at December December 31st and this will allow you to set the baseline for the calculation of your car expenses. I do have another video on car expenses and I'll link to that in the description. And finally, if you have a home office, it's a good time to ensure that your home office percentage calculation is correct. I always recommend having a dedicated spot space that is specifically used for your home office. So even if you don't have a separate room, you should have an area with a desk where your computer and chair is and that is the percentage of your home office that you should calculate. Okay. Tip number two is to estimate your taxes and verify if you have any incentives. Installments owing. So first of all, tax bills can be pretty surprising, especially if you're an unincorporated small business owner or incorporated and you take dividends. You might not really know how much you owe. And there are tools for this. I have a favorite tool, it's by wealthsimple. It's called the wealthsimple Tax Calculator tool. I also have a video on sort of how to estimate your taxes. It's very simple to use, but just make sure you have an idea of what you owe and that should be put away in a separate account or just make sure you have the funds available. The easiest thing to do is to create a separate savings account so that you're earning some interest at least and you know that you can't really touch that money. Similarly, if you are registered for GST and qst, you you should also be putting the money that you are collecting from your customers and clients aside and not using it as cash flow, because this is really not your money. You're simply collecting it on behalf of the government. And once again, you can earn some interest.

And finally, you should make sure if you owe installments and if you are unincorporated, you would have received received a notice from the government telling you that you owe installments from Revenue Canada or Revenue Quebec and make sure that you have paid those installments to avoid additional interest. This is really important. It literally helps you save money and make sure that you're kind of staying on top of your taxes. And remember, the installments are just a down payment towards your taxes that you will owe in 2026 for the 2025 year for GST, HST and QST. If you are registered, you might also have to pay installments. This is determined based on your previous year return. And if you owed more than $3,000, you would have to pay quarterly installments, which are about one fourth of what you owed last year. Again, this is a down payment. You will receive a notice from the government about this. However, they won't tell you the exact amount. So it is up to you to make sure that you get that calculation right. Okay, so the next tip is for those of you that aren't yet registered for GST and QST and it may be time to register. And you should be looking at your sales over the last four quarters to see if you have reached the threshold that requires you to register, which is $30,000 of total sales or total revenues. This is very important. If you do not register there can be significant penalties and interest, so you want to make sure you're on side with this. Additionally, you might not have reach the 30,000, but you might think you will in the new year, then it just might make sense to register anyway. And this allows you to start the new year off with the knowledge that you will start collecting tax. It's a natural time to inform your clients and customers that you are going to start charging tax. And of course if you're a startup or if you're just starting your business or you plan to on January 1, you Even if you do not expect to get to $30,000, it still might make sense to register because you can claim back the gst, HST and QST that you pay on business related expenses. So this is a really good reason to register and certainly there's more administration involved, but it's not that difficult. I have a number of videos, there's lots of videos online and of course articles on how to do your GST and QST properly. Okay, my fourth tip is with respect to and this tip is for everybody, whether you're a small business owner or an employee, you should evaluate your rrsp, TFSA and FHSA route. And so I'm not going to get into this too extensively, but suffice it to say that RRSPs are retirement savings plans. Anything you contribute can be used as a deduction against your taxes and the higher your marginal tax rate, the more you should contribute. If you can, you can see what your contribution room is from your notice of assessment from last year from Revenue Canada. It is on the first or second page. It'll show you exactly what your limit the total amount that your contribution is and this accumulates over time. So if you haven't ever contributed or you've contributed less than your limit for the year, then it will get added on. So if you do have extra money then it is a good time to look into contributing to your RRSPs TFSAs, on the other hand, the contributions are not deductible but anything that grows as investment income in a TFSA. So if you have stocks for example, or fixed deposits, GICs, etc. All of the income that you earn on that will be tax free forever. And this can really accumulate. So putting as much as you can into your tfsa, which is just really like a savings plan is a great idea. And again your contribution room is indicated on your cra my account. However, just keep in mind this isn't always accurate. So it's really important for you to keep track of of how much you're contributing to your tfsa. Otherwise they do penalize you quite heavily if you over contribute. And FHSAs, which are a first home savings account, kind of combine the benefits of both RRSPs and TFSAs and they're a great way to save for your first home. So if you were thinking that you might buy a home in the future, it doesn't have to be next year. It can be in 5 years or 10 years. You should first contribute to an FHSA. Set one up with your bank. And keep in mind the deadline for The FHSA is December 31st, so you want to make sure that you do that before the end of the year. RRSPs, the deadline is March 1 for the curve for 2025 and for TFSAs there's no real deadline. You can just contribute anytime you want. Again, as mentioned, just make sure you don't go over the limit. And my final tip is to donate to your favorite charity or charities. It's obviously a great thing to do. You are helping a charity out and in addition to that you get a tax credit which can be substantial depending on how much you contribute. And so by contributing you can reduce your taxes payable. It is however important to make sure that you are donating to a Canadian registered charity and only Canadian charities are deductible against your income. US Charities are deductible, but only against US Source income. So if you don't have any US income then you're unfortunately not going to get a tax credit for that. In addition, just make sure that you get a charitable receipt and on that receipt it has their Canadian registered charity number. This is essential and sometimes the amount of the receipt will not match the amount of the contribution because there might be a benefit that you receive. It might be for a fundraising dinner or something like that. So make sure you only claim the amount on the receipt. So those are my five tips for you. This is a great time of year to get your finances in order and plan for 2026.

I hope this was helpful. If you have any questions, don't hesitate to leave a comment. I will try my best to answer it and I would love to hear some of your struggles and challenges with your urine finances. Have a great day.