Co-working Spaces for the Self-employed

With a rising popularity in self-employment and freelancing, co-working spaces have become a popular phenomenon that has been embraced by those who work independently, but crave a sense of community in response to working in relative isolation.

Co-working spaces are essentially communal open-space offices and are an affordable solution to having a working environment outside of your home that is not a private office. They are popular among freelancers, entrepreneurs, start-ups and independent contractors.  A simple Google search will show that there are a wide range of co-working opportunities in most major cities in North America.

Besides being an affordable alternative to a private office, a co-working environment can provide many other advantages.

Escaping Isolation

Working in a home or private office can leave one craving face-to-face interaction from others during the day – especially those who aren’t clients! Self-employment can be isolating when your day to day activities are individual ventures. Co-working spaces provide the opportunity to work independently while being surrounded by others. Taking regular coffee breaks or having engaging in some water cooler gossip can help break up the day, create new friendships, and give you a chance to clear your mind from the daily grind of self-employment.

Creating a Community

Those who work in co-working spaces generally have the same values and influences, as they are usually made up of entrepreneurs and freelancers who are working hard to develop and build their business.  As the co-working environment is usually an open concept, it aids in developing relationships and finding inspiration from those around you. As friendships form, the community will naturally rally around each other and help each other out, building a mutual bonding through independent work that one can’t experience when working alone.

Networking

With a sense of community in the co-working space, networking opportunities will naturally follow. It’s great to find contacts that may be able to help you out in the future and for you to offer your services as well. Looking for a copywriter? Chances are someone in your co-working space has a recommendation. It’s much easier to go with a trusted referral rather than searching online and hoping for the best. Surrounding yourself with like-minded individuals can help your business grow and can build some strong and lasting relationships.  

How the Self-Employed Can Save on Taxes

If you are like more than two million Canadians, you own your own business, either fulltime or part-time. Despite the sometimes heartaches of being self-employed, there are many advantages. Many entrepreneurs, though, are unaware of the various tax benefits available to them. In fact, running your own business can increase your after-tax income and contribute to family wealth.

Entrepreneurship and self employment promote a spirit of innovation, ultimately contributing to economic growth and vibrancy. As such, the government encourages entrepreneurship by taxing it at lower rates than regular income.

It is not uncommon for a new business to incur losses as it gets off the ground. These losses can be used to offset revenue from other sources, assuming you have a reasonable profit expectation as the business progresses. As your business begins to turn a profit, you can incorporate and the profits can remain in the corporation as a reinvestment in your operations. It is also possible to leave the profits in the business if you do not need a salary immediately. Thus, you can defer paying personal income tax. A salaried individual cannot schedule when to pay taxes. However, when you are self-employed, you can time payments to yourself when the tax payments are to your benefit.

Profits held in the corporation are taxable in the year they are earned. But, the corporate tax rate is low on the first $500,000 of active business income. While rates vary between provinces, all are below 20%. Personal tax rates on comparable amounts can be as high as 45%. It is also possible to pay salaries to family members in the business and have it taxed at their lower rates. Another possibility is to pay dividends to family members who own shares of the company and, thus, benefit from capital gains exemptions.

There are numerous possibilities for self-employed Canadians to benefit from management of taxes and income. All possibilities and options should be discussed at length with your tax advisor.

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