Are you self-employed? Aside from the business and income risks, were you aware that there is one main “tax” disadvantage for being self-employed?
The main disadvantage for being self-employed is the fact that you must make a full contribution to the CPP (Canada Pension Plan).
When you are an employee, you must contribute 4.95% of your gross earnings up to a maximum $2,163.15. The employer is obliged to match this contribution and contribute on your behalf.
When you are self-employed, you must contribute 9.90% of your net taxable earnings up to a maximum of $4326.30. This amount must be paid upon filing your annual tax return.
