Saving on Upwork Taxes While Being a Freelancer from Canada

As one of the leading platforms, Upwork has strong competitors. For example, if you’re a professional writer and want to make some money, you can apply to Skillhub as a freelancer. You’ll create quality content for people all over the world. With Skilhub, you can make a great portfolio and establish your very own writing style by doing research for your target market.

Are you an expert in any other area? Skillhub has something to offer! We’re looking for creative talents, such as designers, animators, and Adobe Photoshop experts; we’d like to meet developers and data analysts; if you can promote and sell our services, we’ll welcome you into the Sales&Marketing team! Whatever you do, we’ll make sure to find the right project for you!

But now, let’s get back to Upwork. What does it offer, and what taxes should you be aware of?

Indirect Taxes for Freelancers

You definitely have to visit SkillHub if you need to know more on how to hire freelancers. If you’re a freelancer, create an account and be ready to complete the test task.

Whatever your professional goal, you still must comply with Canadian tax laws. Since every country has its differences, it’s a tough spot for people moving around the world. Because you’re always in adjustable mode, ready to face a new payment challenge.

Upwork is a great option for people pursuing work-from-home opportunities. It’s one of the largest freelancing platforms: back in 2020, amid the pandemic, 32% of existing employees planned to switch to remote positions (according to Gartner insights).

So, what are the main Upwork taxes you’ll have to deal with in Canada?

First, it is Goods and Services Tax (GST), a value-added tax, that came into action in November 2021. For digital services (including Upwork), the Canadian Government excludes 5% from every transaction

If you don’t have a GST/HST number, you’ll be obliged to pay the following fees:

• Freelance service fees (not included in earnings)
• Membership fees (for example, for our Freelancer Plus plan)
• Payment processing fees

Calculating GST

GST depends on the services you provide on Upwork. Starting in 2021, GST breaks down by province:

• GST only (deducts $1)
• HST (Harmonized Sales Tax, deducts between $2.60 and $3)
• GST + Provincial Sales Tax (PST, deducts $1 for GST, and between $1.20 and $1.40 for PST)
• GST + Quebec Sales Tax (QST, deducts $1 for GST, and $2.00 for QST)

Upwork must collect Canadian GST and provincial taxes when providing a customer with digital services.

How to Save on Upwork Taxes: Main Tips

Some people think if they don’t report their freelance income, the Canada Revenue Agency (CRA) will just let it slip away. Little do they know about the taxation system: you might get away with it once, but you’ll be subject to penalties if you get caught.

Here’s the important information you might need before validating an Upwork profile:

1. Register your business so that you’ll have legal boundaries between your personal assets and your freelance income;
2. Sign up for a business bank account to build credit for your small enterprise, and make yourself a real deal;
3. Keep budgeting, and never rest on this! It will save those sleepless nights when you begin to wonder how much taxes did you pay;
4. Learn about your tax return: to report freelance income, you’ll have to file Form T2125 Statement of Business or Professional Activities, listing your business and its expenses. By doing it regularly, you’ll save a lot of time because you’ll keep up with the last year’s financials and set your income records straight;
5. Calculate your taxable income: it’s the real income you get after deducting taxes and other expenses (such as office supplies, hardware, internet bills, and marketing);
6. Take your Pension Allowance to the next level by participating in your self-employment and putting some cash aside for retirement. As a freelancer, you still have access to the Canada Pension Plan, but it’s not enough to live once you stop taking orders;
7. Pay your GST/HST Upwork taxes; it’s just a necessity, whether you’ve registered your business or not.

Summary of the Main Points

There are lots of opportunities for freelancers in Canada to set up a business and start earning income. The money you get depends on your expertise and hard skills, which make you an outstanding candidate for every enterprise.

However, you have to realize that a freelancing job has its pitfalls. You’re still subject to taxation, and whether you knew about it or not, you’ll have to pay them regularly. If you want to overcome the tax principle somehow — don’t do that, or you’ll be subject to high penalties and lose more money in the process. You can also visit zety price to get more information.

It takes time to land the first gig and start making real money on Upwork. But before you reach that, just remember to keep your best foot forward and never give up. Working at Upwork is worth a try!