Sole Proprietor Income & Expenses

by Peggy
(Alberta)

My client earned income as a sole proprietor for part of 2013 and also worked as an employee during 2013 so he will also have T4s.

I have been asked to prepare a spreadsheet of income and expenses. Do I need to separate the expenses being claimed while he worked as a sole proprietor from the expenses being claimed while he was an employee?

Does anyone have a sample Excel spreadsheet for this situation?

Hi Peggy,

Yes you have to separate the two sets of expenses.

Sole proprietor income and expenses go on form T2125 - Statement of Business or Professional Activities while employment expenses go on form T777 - Statement of Employment Expenses. Form T2200 - Declaration of Conditions of Employment needs to be completed by the employer before employment expenses can be claimed.

To setup your Excel worksheet, pull the T2125 and T777 forms off the CRA website, and categorize your information according the expenses that can be claimed. If there are any expenses that are not tax deductible, have a column to report those in.

What you are preparing is called a "Synoptic Journal". I chat about synoptic journals here.

I also discuss how to get your free copy of an accounting forms package developed using Excel ... you might find interesting and perhaps useful.

Hope this helps get you started.