Self-employed income is calculated by subtracting business expenses from gross revenue to determine net profit

Self-employed income calculation involves determining your total business earnings after accounting for all allowable expenses and deductions. As a self-employed individual in Canada, you must report your net business income to the Canada Revenue Agency (CRA).

The basic formula includes:

• Calculate your gross revenue (all income from sales, services, and other business activities)
• Subtract eligible business expenses such as:
  • Office supplies and equipment
  • Vehicle and travel expenses
  • Marketing and advertising costs
  • Home office expenses
  • Professional fees and insurance
• Account for GST/HST collected and paid if your business is registered
• Include any additional business-related income like grants or subsidies

Keep detailed records of all transactions throughout the year to ensure accurate reporting and maximize legitimate deductions on your tax return.