Filing Taxes as a Freelancer or Contractor in Ontario: A Step-by-Step Guide

Introduction: Taxes Don’t Have to Be Scary When You’re Self-Employed

Being your own boss comes with freedom—but also new responsibilities, especially when it comes to tax time. If you're a freelancer, independent contractor, or part of Ontario’s growing gig economy, you don’t get a T4 from an employer or automatic tax deductions from your paycheck. That means it’s up to you to track income, claim expenses, and calculate taxes owed.

At Henderson Roller Partnership in Oakville, we specialize in helping self-employed professionals—from graphic designers to tradespeople—navigate the tax system with confidence.

This guide will walk you through everything you need to know about filing taxes as a freelancer in Ontario, from registration to deductions to staying on the CRA’s good side.

1. Am I Considered Self-Employed or a Contractor?

You’re considered self-employed in the eyes of the CRA if you:

• Work for yourself, not an employer

• Invoice clients for your work

• Don’t receive a T4 from a company

• Have control over how and when you complete your work

This includes:

• Freelancers (designers, writers, developers)

• Consultants

• Rideshare drivers (e.g., Uber, Lyft)

• Tradespeople working under contract

• Online sellers and influencers

You’ll file your taxes as a sole proprietor unless you’ve chosen to incorporate.

2. Do I Need to Register a Business?

If you're using your own name, you’re not required to register a business in Ontario.

However, if you operate under a business name (e.g., "BrightSky Digital"), you must:

• Register a business name with ServiceOntario

• Consider registering for an HST number if your gross income exceeds $30,000/year

💡 Tip: Even if you're under the HST threshold, registering voluntarily can let you claim input tax credits (ITCs) on business expenses.

3. What Tax Forms Do Freelancers File?

As a sole proprietor in Ontario, you’ll file your taxes using:

• T1 Personal Tax Return

• Form T2125 – Statement of Business or Professional Activities

This form breaks down your:

• Gross income

• Cost of goods sold (if applicable)

• Business expenses

• Net business income (which is added to your total taxable income)

4. Tracking Income: Keep It Clean and Consistent

You must report all income, whether you’re paid by cheque, e-transfer, PayPal, or cash.

✅ Best Practices:

• Open a separate bank account for your business

• Track each invoice and payment received

• Keep a spreadsheet or use accounting software like QuickBooks or Wave

• Don’t rely on clients to issue tax slips—it’s your responsibility to track earnings

5. Claiming Business Expenses: What You Can Deduct

This is where freelancers can reduce their tax bill—by claiming eligible business expenses.

Common deductions include:

Expense Type	Examples
Home Office	% of rent, utilities, property tax, internet
Supplies	Software, subscriptions, tools
Vehicle	Fuel, insurance, maintenance (business-use portion only)
Marketing	Website, ads, design services
Professional Fees	Accountant, lawyer, consultant
Meals & Entertainment	50% deductible for client-related meetings
Travel	Hotels, flights, transit for business trips

💡 Tip: Keep all receipts and mileage logs. The CRA requires proof in the event of an audit.

6. Understanding CPP Contributions

As a self-employed individual, you must pay both the employer and employee portions of the Canada Pension Plan (CPP)—which equals 11.9% of your net income (up to the annual maximum).

This is calculated automatically when you file your return using form T2125.

7. How Much Tax Should I Set Aside?

Since taxes aren’t withheld from your income, it's crucial to set money aside throughout the year.

🔢 General Rule:

• Save 25–30% of your net income for taxes and CPP

• If you earn more than $30,000, also plan for HST payments

Consider using a separate savings account and transferring a portion of each payment into it.

8. Do I Need to Pay Instalments?

If you owed more than $3,000 in tax last year, the CRA may require you to pay quarterly instalments the following year (March, June, September, and December).

Missing instalments results in interest charges, so it’s wise to:

• Track your estimated taxes

• Work with a CPA to calculate accurate instalment amounts

9. Filing Deadlines for Freelancers

• Tax filing deadline: June 15 (for self-employed individuals)

• Tax payment deadline: April 30 (interest starts accruing on unpaid balances from this date)

If you owe taxes, don’t wait until June 15 to pay—it will cost you.

10. Why Work With a CPA if You’re Self-Employed?

Tax software can file a basic return, but a CPA offers much more:

• Identifies hidden deductions to maximize your return

• Ensures compliance to avoid CRA penalties or audits

• Helps with HST filing, instalments, and long-term planning

• Offers support year-round—not just at tax time

At Henderson Roller Partnership, we work with freelancers and small business owners across Oakville to simplify tax season and help you keep more of what you earn.

Conclusion: Taxes as a Freelancer Don’t Have to Be a DIY Job

Whether you're freelancing full-time or running a side hustle, understanding how to manage your taxes is key to building a successful self-employed career.

With the right guidance and preparation, you can reduce your tax burden, stay compliant, and focus on growing your business—not worrying about the CRA.

Need Self-Employed Tax Help in Oakville?

📍 Visit Henderson Roller Partnership📞 Call us to schedule a consultation💻 Or file your taxes with our experienced CPA team online or in person

Henderson Roller – Your Local Experts in Self-Employed Tax Filing and Freelancer Financial Planning.