2017-05-16 14:07:38Self EmployedEnglishWith on-demand work, workers can set their own schedule, work a variety of jobs at the same time, and find specific work in their area of...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/05/on-demand-courier-checks-his-finances-on-phone.jpghttps://quickbooks.intuit.com/ca/resources/self-employed/how-to-manage-your-finances-as-an-on-demand-worker/How to Manage Your Finances as an On Demand Worker

How to Manage Your Finances as an On Demand Worker

3 min read

On-demand work is a rapidly growing alternative to the nine-to-five job. Companies such as Uber and AirBNB are effectively reshaping the economy. With on-demand work, workers can set their own schedule, work a variety of jobs at the same time, and find specific work in their area of expertise.

According to an Intuit study, 63% of on-demand workers are using on-demand jobs to supplement their income. 46% of on-demand workers say that they take on-demand jobs in order to control their schedules. On-demand work is well within reach thanks to popular services like Uber and hiring networks like UpWork or Freelancer.

While on-demand work provides flexibility and freedom that a traditional nine-to-five job cannot always provide, on-demand workers are considered to be self-employed in the eyes of the Canada Revenue Agency (CRA). This means that on-demand workers must track their business (on-demand work) finances separate from their personal finances and submit tax payments to the CRA.

With some planning and financial know-how, you can learn how to manage and your finances and taxes as an on-demand worker. Here’s how to get started.

Tracking Expenses

On-demand workers must remember to track all expenses related to their on-demand work to comply with tax rules. Expenses for on-demand work could include:

  • Utilities, internet and cable
  • Car or transportation costs
  • Supplies related to your gigs (tools, fuel, insurance)
  • Additional homeowner’s insurance (if you run your gig out of your home)

QuickBooks Self-Employed can help you keep track of expenses so that you’re ready at tax time. You can enter your expenses manually or take a photo of your receipts and QuickBooks Self-Employed will enter and categorize them for you. If your on-demand work involves driving, you can also use the built-in mileage tracker to keep track of your tax-deductible mileage.

Remember, it’s important to keep your business (on-demand work) expenses separate from your personal expenses for Uncle Sam.

Managing Cash Flow

Some types of on-demand work require that you submit invoices weekly or monthly in order to get paid. You will need to create, submit, and track your invoices so that you know how much money is coming into your account and whether you have enough money to cover your expenses. This is called cash flow management. Maintaining a positive cash flow means that you have enough money to cover your expenses and any purchases you may need to make. QuickBooks Self-Employed keeps all of your finances in order so you know exactly where you stand, and you can see how much money is coming into and going out of your account each month.

Paying Estimated Taxes

Everyone must report their income to the CRA each year, whether they are a full-time employee working in a company or an on-demand worker. Full-time nine-to-fivers typically receive a T4 slip from their employers and use it to report their income when they file taxes. Alternatively, on-demand workers usually receive a T4A slip from each client or service provider (i.e. Uber) they worked for that calendar year.  The T4A slip reports the total amount paid to the on-demand worker that year.

When you work for a company full-time, the company is responsible for withholding taxes from your paycheck and delivering those tax payments to the CRA. Full-time employees don’t need to worry about sending tax payments throughout the year because their employer does it on their behalf. When you are an on-demand worker, you are responsible to calculate and send the CRA your tax payments. The CRA requires on-demand workers to send tax payments yearly when they file their taxes on April 30.

With a bit of research and practice, you can learn how to manage your finances and taxes as an on-demand worker. For more information, check out the Canada Revenue Website for further information regarding tax deductions that you can claim as an on-demand worker.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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