October is Small Business Month in Canada, and as a business that seeks to uplift and support small business owners, we don’t want to let the month go by without acknowledging all the talented freelance beauty professionals. Small Business Month was established in Canada in 2006, growing from Small Business Week, which was first established in 1979. It is a time to bring focus onto the contributions of entrepreneurs and local small businesses in Canada and our economy.
Many entrepreneurs and small business owners gather during Small Business Week to network and learn from one another. Some things to put your attention on when wanting to start or maintain your small business are networking, tax help, leveraging best practices used by successful business owners and large companies, and managing costs. As we are closing in on the month, we want to share with you what our ScissorsCut app can do to help you as an entrepreneur in the beauty industry, along with other tips on navigating the business world.
How the ScissorsCut App Works
The ScissorsCut App is a platform for both beauty professionals and people seeking the services of a beauty professional. For those of you who offer beauty services in makeup, hairstyling, barbering, spa, manicures, and skincare, you can select your expertise on the app to make it easy for clients to find you. The app makes it easy to track payments and tips. Using the app allows you to make your own schedule, add when you’re available for work and when a client needs your expertise, they will book with you around your availability.
Because you aren’t working out of a salon, you save money on the cost of renting space and giving the salon a cut. Everything you make from your appointment, you get to keep. If a bride needs her makeup done, you go to her. If someone needs a manicure, you can meet them in their home or another agreed-upon location within your travel range. With the ScissorCut app, you can provide the services without having to push products or meet the numbers a salon sets. Sometimes having metrics to keep sales high makes it difficult to provide exceptional service because the focus is on the bottom line instead of the client.
When you can be your own boss, you set your own rules. You can guide your clients to products that you know will work for them without the obligation of having to sell them. Our app is great for you whether you are starting straight out of beauty school, are looking to leave a brick-and-mortar establishment, or have the flexibility to do both.
Filing Taxes as a Freelancer
As a business owner, you take on a lot, if not all, of the administrative tasks of your business. One of those very important tasks is filing taxes for your business. Four things to keep in mind if you are new to freelancing are:
- As a freelancer, if you are providing a good or service for profit, you are considered self-employed.
- Any income you make as a freelancer is taxable, and you will need to track income and expenses.
- Claim business deductions
- Marketing (website, print and digital ads, or SEO upkeep)
- Equipment (laptop, desktop, camera, styling tools, skincare products, etc)
- Software subscriptions
- Mobile plan and internet payments
- Travel (gas, paying for public transport, or purchase of vehicle)
- Meals and entertainment (taking a client out for dinner or eating out during a full day of work if food is not provided to you by the client)
- Training and professional development (continued education)
- Accounting costs
- Legal cost
- Business Insurance
You have to register for GST/HST number if your annual earnings from freelancing are $30,000. In some cases, you may be freelancing while also being employed. This may feel overwhelming and seem tricky to navigate when filing taxes. Just remember that your employer will handle providing anything you need to file taxes based on income earned working for them. What you need to make sure to know is that with income coming in from two sources increases your taxable revenue, which may lead you to be in a new tax bracket.
Home Office Expenses
As more Canadians run businesses from the comfort of their own home, it is important to know what qualifies as an expense and how to claim it when filing taxes. One of the following needs to be true for your home to qualify, your home either needs to be the central place of business, or you use the space only to earn income, such as meeting clients, patients, or customers. Some examples of what can be expensed, if your home office qualifies, are the following:
- Maintenance (Hydro, heating, electricity, and water)
- Home/Rental Insurance
- Cleaning Products
- Rent
- Property taxes
- Mortgage interest
- Routine or incidental repairs
You cannot expense 100% of what you pay for, but you will be able to do a percentage of it. To calculate the percentage it is necessary to speak with a tax advisor.
Canada Pension Plan (CPP) Contributions
CPP for the self-employed is something you should not overlook! Anyone between the ages of 18 to 70 with an income greater than $3500 has to contribute to CPP. As a self-employed person, you have to contribute 2x the annual percentage to the annual max. The contribution is based on the net income of your small business. When it comes time to file taxes, visit the official Contributions to the Canada Pension Plan for guidance and speak with your tax preparer if you have questions or concerns.
Freelancing as a Beauty Professional
Being your own boss, setting your own rules, and making your own schedule are just some of the pros of being a freelancing beauty professional. It is a fulfilling life that, when done right, can bring you professional success. There is a lot of learning along the way, and October isn’t the only month when one should network; network year-round, continue to educate yourself, and meet with a mentor. Know that being your own boss is a journey of growth and fulfillment.