Whether you are a Canadian citizen looking to make some extra money or someone who wants to travel across Canada while working as a freelancer to support them, there are several factors to consider if you want to work as a freelancer in Canada legally. Continue reading to learn what steps you should take to become a freelancer in Canada.
Do freelancers need a business licence in Canada?
For the most part, freelancers in Canada are not required to obtain a business license so long as they plan on working from home. However, there are some expectations to this, depending on the kind of freelance work being conducted and the region the freelancer is working within. For example, a hairstylist working from home may require a licence, depending on where they are working, but someone working as a freelance writer would not. Checking local laws before conducting freelance work is always a good idea.
So, freelancers are not generally required to have a licence, but depending on the work they do, they may require a business number. Business numbers can be obtained through the Canada Revenue Agency (CRA) and are only required when freelancers get to the threshold requiring them to start filing sales tax or GST/HST. The threshold is $30,000 in most cases, but it is best to conduct research on the topic or consult a tax professional.
Freelance taxes: what should you charge clients?
A common misunderstanding in Canada is that freelancers are not business owners, but in Canada, the term freelance does not have any legal standing. Instead, many freelancers are self-employed and operate as a sole proprietorship, meaning taxes are paid on business income. The kind of work and the amount of income earned will determine if you should be charging clients. As mentioned before, there is a threshold before freelancers need to start charging sales tax. It is best practise to consult with a tax professional to consult on your specific situation.
Do I need to declare freelance income in Canada?
Like all income earned in Canada, freelance income does need to be reported when filing annual taxes, whether you are freelancing for some extra income or as a full-time job. While typically, employers handle income taxes, setting aside a certain percentage and paying it to the government on behalf of the employee and providing a T4 slip to assist with filing taxes, freelancers are responsible for determining and paying their taxes.
Depending on how much a freelancer earns annually, the percentage they should be setting aside from their earnings will dictate if they need to pay the CRA annually or every quarter. When considering income taxes and contributions to the Canadian Pension Plan (CPP), the general rule of thumb is to set aside 30% of your income for taxes in addition to any GST/HST you may be collecting. If you are unsure, speaking to a tax professional is best.
What type of freelance work should you focus on?
There are many kinds of freelance work available, many of which can be done online from the comfort of your home. One of the more popular options is writing. Whether you choose to start a blog and monetize it, or sell your services to companies around the globe, there are many opportunities out there for writers. Another option that has seen more recent popularity is becoming a virtual assistant. However, with this option, you may need to stick to more set hours corresponding with the individual or company you are assisting. One option that has found great success for many freelancers is selling digital products; one of the benefits of this option is how you can use it to support other ventures like a monetized blog or YouTube channel. At the end of the day, there are many options available for potential freelancers to consider in Canada – you just need to find the right one for you.
Can I go to Canada as a freelancer?
If you are ready to try living as a digital nomad and make money travelling the world as a freelancer, you might wonder if you can visit Canada and still work there. Suppose you originate from a Western region like the United States, Australia or Europe. In that case, you will have a reasonably easy time entering Canada as they do not require a visa to visit for up to 6 months as tourists. If you are traveling to Canada from Australia or Europe, you may need to obtain an Electronic Travel Authorization (eTA). If you are coming from a country outside of these regions, chances are you will need to obtain a travel visa, but it is always best practice to double-check with your government’s website. Visiting Canada as a freelancer is fine if you do not seek employment within Canada.
For example, if you lived in the United States and wanted to visit Canada, so long as you continued to accept freelance work from the United States and did not pick up freelance work within Canada, you would be ok.
Of course, suppose you want to stay longer than six months. In that case, you can always look at some of the immersion programs available, such as the International Experience Canada (IEC), which has three programs and is a popular option for freelancers and young professionals.
There is also the Federal Self-Employed Persons Program, which requires individuals to demonstrate that they can make a solid contribution to Canada’s cultural or athletic life, and the applicant must show that they have enough money to fund their business or work within a field of athletic or cultural significance. Finally, the Quebec Self-Employed Persons Program is similar to the federal program but also requires the person to have a start-up deposit within a local bank of $50,000 within Montreal or $25,000 outside of Montreal.
Interested in making money online in Canada as a freelance writer?
So long as you properly document your income and do the necessary research on how much money to set aside for taxes, anyone can become a freelancer in Canada. If you are ready to try your hand, why not apply to work with a freelance writing company such as Words of Worth, which allows you to focus on writing while they handle finding and securing clients?