Frequently Asked Questions
How do I calculate my freelance hourly rate in Canada?
Start with your desired annual take-home pay. Add CPP contributions (both employee and employer portions), federal income tax, provincial income tax, health benefits, retirement savings, and business expenses. Add a profit margin for gaps and emergencies. Then divide by your realistic billable hours per year (typically 1,200β1,500 hours). That's your minimum hourly rate.
Do I need to register for GST/HST?
You must register for GST/HST if your revenue exceeds $30,000 in four consecutive calendar quarters (the "small supplier" threshold). Below that, registration is voluntary. If registered, you charge clients 5% GST (or HST of 13β15% depending on province) on top of your rate. You can then claim input tax credits on business purchases. The GST/HST you collect isn't your income β it goes to the CRA.
What is a good freelance rate in Canada?
Rates vary widely by industry and location. Software developers typically charge $75β$175/hour, designers $50β$125/hour, writers $40β$100/hour, and consultants $100β$250+/hour. Rates in Toronto and Vancouver tend to be higher than elsewhere. The key is to calculate YOUR number based on your costs rather than guessing from averages.
How does CPP work for self-employed Canadians?
When you're employed, you pay 5.95% of pensionable earnings and your employer matches with another 5.95%. As a self-employed person, you pay both portions β 11.9% total β on net self-employment income between $3,500 and $68,500 (2024 limits). There's also CPP2, an additional 4% on earnings between $68,500 and $73,200. This is reported on your T1 return using Schedule 8.
Do self-employed Canadians pay EI?
EI is optional for self-employed individuals. If you opt in through Service Canada, you pay the employee premium (1.66% of insurable earnings up to $63,200) and gain access to special benefits: maternity, parental, sickness, compassionate care, and family caregiver benefits. You don't get regular EI benefits (job loss). Once you opt in and receive benefits, you can't opt out.
Should I incorporate or stay a sole proprietor?
As a sole proprietor, all business income is taxed as personal income. Incorporating creates a separate legal entity with a lower corporate tax rate (typically 9β12.2% on the first $500,000 of active business income via the small business deduction). Incorporation makes sense when you're earning significantly more than you need to live on and can leave money in the corporation. However, it adds complexity and costs ($1,000β$3,000/year in extra accounting). Talk to an accountant when your net income consistently exceeds $80,000β$100,000.