Entry level job-would it benefit me in anyway to open my own self empoyed business on the side?

Question

Hello,

I am just curious. I am a recent grad and can start my own "small/self" business but like any new grad I'm still hesitant and a bit nervous about working in my field and have start working in an area in the TOTAL OPPOSITE OF what I am suppose to do (my employers even questioned why I didn't do what I went to school for since this job is not very high paying compared to what I can do).

So I am just curious cause now that I am finally in the real world and relize how much the canadian goverment LOVES OUR money (tax). Would opening my "self employed or small business" out of my home be any benefits to me regarding take home pay, writing things off, etc etc

Thank you for help!

Answer 1

Hi...I would say any home based business has an advantage. I have been doing home businesses for years and I have found it always is a supplement to what I have earned in addition to my job.

I currently am just beginning a essential oil and skin care business and the great thing about it was I did not have to spend any money to sign up to begin. Our leader even devised a way that if we sell to our family and friends thirteen foot care kits she put together at the cost of $50 US dollars...we would have enough money to earn our demonstration kit without having to spend any out of pocket money.

Not sure if you have heard of the product Likisma...but if you want to check out this company my website is www.escentualoilslikisma.com. They are a UK company but they have a warehouse right there in Canada.

I wish you the best and if you have any questions feel free to contact me.

Answer 2

Yes -- opening a home-based business can be beneficial from a tax perspective.

Assuming that you have the necessary skills to take care of the administrative side of the business (specifically the accounting), then you can use your small business to write of a portion of your living expenses (mortgage interest/rent, utlities, phone, etc)as they relate to your business. If your office is 15% of your total floor space, then you can claim 15% of your costs to run your home.   These are called "Business Use of Home Expenses" and they are a tax deduction.

However, all businesses must have the intent to make money.  You can't start a business which is going to fail, but then take the tax write offs.  You have to demonstrate that your business is functioning.  You are permitted to claim a loss (business expenses exceeded income) for the first while since most businesses lose money in the first few years, but you can't claim a loss forever.

There are plenty of great resources for people trying to start a new business.  Most of the them are free.   Look up "small business" for your privince, and you should find links to the provincial program in your area. They've always got loads of great courses, networking parties, etc. You might even find you are eligible for a loan/grant to help start your business -- maybe that would make it less scary!

Answer 3

CS might be a little misleading here.  You are NOT allowed to 'write off' any portion of your living expenses.  What deductions you can claim are only (and very strictly limited to) BUSINESS related costs.  For instance, while you can deduct part of rent payments, that is only for a portion of the building which is SOLELY used for business.  Do your business work at the kitchen table?  No deduction.  Use a room for an office, but also do your personal taxes, bills etc there?  No deduction.

The advantage to starting a small business is to earn money, while hopefully having the freedom to do what you love.  That's it, that's all.  If you have a reasonable chance to do so, then of course it's an advantage.  If you create a business simply to somehow finagle deductions from the tax man, you're setting yourself up for a lot of work for no gain.