Understanding the T2125 Form for Self-Employed Canadians
If you’re self-employed in Canada, whether you freelance, consult, sell products, or drive for Uber, you’ll likely need to complete Form T2125 at tax time. It is used to report your self-employed business activities.
Form T2125, also known as the Statement of Business or Professional Activities, is submitted with your personal tax return. It must be filed by June 15 of the year following the income tax year. It’s used to report:
- Business income
- Professional income
- Commission income
- Related business expenses
If you’re earning money outside of a regular T4 job and you’re not incorporated, then you’ll need to fill this out.
Essential Documents for Completing Your T2125 Form
- Basic Info
- Your name or business name
- Business number (if you have one)
- Industry code – Find your code here (ChatGPT is a great resource for this as well)
- Income
- Gross income earned from your business or professional activities.
- Expenses
- You can deduct reasonable costs to run your business, such as:
- Advertising
- Office supplies
- Rent
- Vehicle use (for business)
- Meals (50% limit)
- Phone/internet (business portion)
- Professional services (like accounting)
Here’s a full list of deductible expenses from the CRA.
- Home Office
- If you work from home, you can deduct a portion of your utilities, rent, and property tax.
- Mixing personal and business expenses
- Forgetting income from side gigs
- Filing one form for multiple businesses (use a separate form for each)
- April 30 – Payment deadline for any taxes owed
- June 15 – Filing deadline for self-employed individuals
(Note: interest on unpaid taxes starts May 1)
Learn more about the process and details from CRA here.
Accounting and Advisory Support for Business Owners
KWB works with business owners to help you simplify your accounting ,improve your profit, and achieve your goals. Learn more and book an introductory meeting here.