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How to Complete the Business or Professional Income Prep Form

Learn how to accurately complete the Business or Professional Income Prep Form to report a client’s business or professional activities for tax purposes.

This form is essential for clients who are sole proprietors or professionals earning income outside of employment. Properly completing this form helps ensure that business income is correctly reported, and all eligible expenses are claimed to reduce taxable income.

Entering Business or Professional Activity Details

This section provides the tax team with key information about the business structure:

  • Business Name: The legal or operating name of the business.

  • Business Number: If the business is registered for GST/HST, include the CRA-issued business number (9-digit number followed by RT0001).

  • Business Address: The physical or mailing address where the business operates.

  • Fiscal Period: Typically January 1 to December 31, unless the client has a non-calendar year fiscal period.

  • Business Closure: If the client has permanently closed the business this year, mark "Yes" to help the tax team file a final return for the business.

  • Main Product or Service: A description of what the business provides (e.g., "graphic design services," "retail clothing sales").

  • Your Percentage of Business Ownership: The client’s ownership percentage if the business is co-owned with another individual.

Please Note: If the client operates multiple businesses (e.g., consulting + online retail), complete one form for each activity.

Reporting Business or Professional Income

Here, report gross income before expenses:

  • Business Income Section: Used for product-based businesses (e.g., retail shops, online stores, etc.)

    • Gross Sales (GST/HST Inclusive): Total revenue from product sales, including any GST/HST collected.

    • Total GST/HST Collected: Amount of GST/HST collected from clients/customers.

  • Professional Income Section: Used for service-based professionals (e.g., consultants, lawyers, freelancers).

    • Gross Professional Fees (GST/HST Inclusive): Total service fees earned, including GST/HST collected.

    • Total GST/HST Collected: GST/HST collected as part of invoicing clients.

Please Note: Receipts are not required to be submitted with the form but must be retained in case of a CRA review.

Listing Business or Professional Expenses

These are costs incurred to earn business income. They will reduce the client’s taxable income. Include the total amounts spent during the fiscal period for each category:

  • Advertising: Costs for online ads, print ads, business cards, promotional materials, etc.

  • Meals and Entertainment: 50% of reasonable meal and entertainment costs related to business activities.

  • Bad Debts: Amounts invoiced but determined to be uncollectible.

  • Mortgage Interest: Interest paid on business-owned property (only if applicable).

  • Business Taxes, Licenses, and Memberships: Professional licenses, municipal taxes, and association membership fees.

  • Office Expenses: Day-to-day office costs such as postage, pens, small equipment under $500.

  • Office Stationery and Supplies: Larger office supply expenses (e.g., printer toner, bulk paper purchases).

  • Professional Fees: Fees paid to accountants, lawyers, or consultants.

  • Management and Administration Fees: Fees paid to third parties to manage business activities.

  • Rent: Amounts paid to lease or rent office or business space.

  • Repairs and Maintenance: Repairs to office equipment, business property, or vehicles used in the business.

  • Salaries, Wages, and Benefits: Employee wages and benefits, including employer-paid CPP/EI.

  • Property Taxes: If renting, this is usually included in rent. If owning the space, include business-use portion.

  • Travel Expenses: Business-related travel including airfare, hotels, taxis, etc.

  • Utilities: Hydro, gas, phone, and internet services related to business operations.

  • Fuel Costs: Fuel for vehicles used exclusively for business (outside of motor vehicle expense section).

  • Insurance: Business insurance such as commercial liability or professional liability policies.

  • Other (specify): Any other deductible expenses not captured above (e.g., software subscriptions, cloud services).

Inputting Motor Vehicle Expenses

For vehicles used partially or fully for business, report the following:

  • Vehicle Details: Include make, model, year, and date when the vehicle was acquired.

  • License and Registration Fees: Annual vehicle licensing and plate renewal fees.

  • Maintenance: Total spent on repairs, oil changes, and upkeep.

  • Insurance: The cost of insuring the vehicle.

  • Leasing Costs: Monthly lease payments if the vehicle is leased.

  • Fuel: Total gas or diesel costs for the year.

  • Other: Include tolls, parking fees, or other vehicle-related expenses.

Business Use Calculation:

  • Kilometres driven for business: Only include business-related driving (e.g., client meetings, deliveries).

  • Total Kilometres driven in the year: Odometer reading at the start and end of the year or actual total.

  • Percentage for business use: Divide business kilometers by total kilometers to calculate the business-use percentage. This percentage will be used to pro-rate vehicle expenses.