Tag Archive for: digital entrepreneurship

self-employedI want to share with you my first business breakthrough when I became self-employed.

There’s an accountant I work with who often says

“it’s not about how much you make that matters, but how much you keep”.

When I was younger I didn’t really understand what this meant. I mean, yeah, it sounds intelligent, but I figured “keeping” money was just another way of saying “spend less”.

However, after the first year I started working as a self-employed freelance digital marketer and was doing my personal tax returns, I realized that this advice was really about finding ways to reduce your taxable income.

Of course I’m talking about reducing your taxes by law abiding means and not being a crook.

The last job I had before going off on my own was working for a telecom company making a $50,000 salary.

So, when I did go off on my own, my goal was to match that and make $50,000 in the first year.

In my mind, I figured if I could make $50,000 on my own, essentially unemployed (cause you know, I wasn’t on anybody’s payroll), that it would be a great life experience. A fate far better than still sitting inside a cubicle office any longer.

And I thought even in a worse case scenario where somehow I totally screw up and lose all my money, I’d still have the experience of knowing how to make $50,000 all on my own. And nobody could ever take that experience away from me. Even if I lost it all, I’d know how to make it back because I have the experience of no longer relying solely on employment income.

So there I went off on my merry way, making strategic professional relationships, finding my own clients, doing work I’m proud of and eventually invoicing those clients and getting paid.

Inevitably I climbed past the $30,000 mark, registered my business name with the CRA (Canada Revenue Agency) and started adding HST tax to my invoices. I kept going and managed to reach that goal of $50,000 by year’s end.

Now here’s the cool part with the business breakthrough…

Everyone knows that whatever your annual salary is, you always take home less because of taxes and deductions on each of your pay cheques.

Here’s a snapshot look at what you lose if you make $50,000 a year working in the province of Ontario.

50000 salaryYou lose about $11,500, which is almost 25% of your earnings. It totally sucks, I know. But that’s the life of an employee.

However, when you’re self-employed things work a bit differently. You see, you can reduce your taxable income amount by claiming business expenses.

This is how it works, when you charge HST tax on your invoices you’re suppose to keep that money to the side and pay it to the CRA (the government). You can choose to make these HST payments annually, quarterly, monthly and I think you can even choose to pay bi-weekly. In my first year I paid it all annually at the end. Since then I’ve been doing it quarterly.

Here’s the cool thing with being self-employed, you can reduce the amount of HST tax you owe by offsetting it from the HST tax you pay on your business expenses.

So anytime you buy office supplies, computer upgrades or software, automobile expenses and gas, your phone and internet bill etc. all these things can be claimed as a business expense.

To figure out what you owe the government in taxes, you take all the HST you’ve collected from your invoices (in other words your income) and subtract it from all the HST you spent on your business expenses.

Chances are very likely that you’ll owe less taxes than someone who works as an employee.

So, what did I owe the government in taxes for that first year I was self-employed? Let me show you!

taxable income

That’s a photo of the letter my accountant wrote for me on the front page summary report of my personal income tax return for the 2016 fiscal year. I legally only owed the government $3,564.43 in taxes.

If you ask me, that’s a much sweeter deal than being an employee.

However, there are 2 caveats with this.

  1. The government forces everyone to make a CPP (Canada Pension Plan) contribution of 10% of your income. When you’re an employee you pay 5% and your employer matches the other 5%. When you’re self-employed, in the eyes of the CRA, you are both employee and employer of your own business, so they make you pay the full 10% on your own. But you don’t have to pay EI (employment insurance) deductions when you’re self-employed.
  2. Because it was the first time I had to manage all my income and expenses on my own, my accountant told me I was lousy at bookkeeping and I should have been better at keeping all my receipts. My accountant told me I could have paid even less tax if I was better at keeping track of all my expenses. (Fuck me, I guess).

So you better believe I went out and bought Freshbooks Cloud Accounting to help me with that! And guess what, my accounting software is a business expense so now I can deduct that too!

When it comes down to it, when you’re an employee making $50,000, you’ll pay roughly $11,583.60 in taxes and deductions. Compare that to the $8,564.43 (combining the HST I owed plus 10% CPP) I had to pay as a self-employed individual who made $50,000.

You can clearly see that I walked away at the end of the year with more money being self-employed. And that was my biggest business breakthrough in the first year. Now, it’s only a difference of about $3,000 and you might be thinking that’s not much. But think about all the cool stuff I can do with that extra $3,000. I can reinvest it back into my business, or put it towards retirement savings, hell, an extra $3,000 is even a good chunk of money for a vacation!

Now that I’ve learned this, I don’t think I’d go back to working for someone else as an employee. I’ve also been reading and educating myself more about small business taxation and how money works. It turns out that the small business tax rate in Canada is 15%. Compare that to the 100% tax you have to pay on every dollar you earn as an employee.

Although I haven’t incorporated my business yet to get that small business tax rate, it is my next goal to achieve. As well as continuing to increase my annual income well pass $50,000.

It does seem however, that the more I learn, the more I realize being an employee is the worst career choice you can make from a financial stand point.

Now, being an employee isn’t terrible. I started out as an employee, as do most other people. It’s a great way to get into the labour market and to get on-the-job experience in your field. But remaining an employee for the entirety of your career, well, that’s probably not the best choice you could be making for yourself (or your family). Although, every individual is different and I don’t want to come across as someone with a self-employed bias…

…but if you were to ask me what’s the moral of this story?

Simple: if you can be self-employed, you should!

multimediaIt’s been said that every entrepreneur is a digital entrepreneur.

And in a sense all entrepreneurs are using digital technologies to build, launch, and grow their businesses.

But it would be wrong to think all entrepreneurs are doing everything digitally.

Although, amazingly, it is now possible to do that.

And it can create compelling career and lifestyle options for you in the process.

But what exactly is a digital entrepreneur and how do you become one?

Well in a word: interdisciplinary skills.

I know, that’s two words.

But anyone with multimedia skills, which are interdisciplinary in nature, can become a digital entrepreneur.

Digital entrepreneurs are business owners who focused exclusively on digital commerce.

And digital commerce is selling products and services that are marketed, delivered, and supported completely online.

Examples of digital commerce products include ebooks, online education, membership sites, downloadable software or files, web hosting and web site management, and software as a service (“SaaS”).

Anyone with multimedia skills like web/app design, photography, videography and writing can build a business for themselves.


What does every multimedia expert and digital entrepreneur need to succeed?

It stands to reason a good website is a prerequisite for success.

There are five elements of the modern marketing website that all multimedia specialists need to be thinking about and implementing in a smart way.

Really, all entrepreneurs need a website that incorporates these five elements.

  1. Email (registration, not just opt-in)
  2. Adaptive content and responsive design
  3. The access experience
  4. Online courses as lead magnets
  5. Testing … of everything

Technical skills in multimedia is what you’ll need to implement those 5 elements for yourself. And an interdisciplinary approach will help you execute the work.

A podcast I listen to from the people over at CopyBlogger discus these five elements in the second episode. Here’s a quick link incase you want to listen: The 5 Elements of the Modern Marketing Website

How many people does it take to build an effective website?

You know, I frequently find myself having this conversation with potential clients often.

It honestly doesn’t take that much to develop an effective online marketing solution.

I’m living proof you can do it as one person.

In the multimedia field there are three primary areas of expertise involved with creating an effective website:

  • art/design
  • technical
  • marketing

Sadly many schools offering web design programs don’t offer a comprehensive curriculum which adequately addresses all these areas.  Most schools focus primarily on the design aspect (layouts, colors, etc.)  By necessity they do delve into the technical side, but tend not to spend significant time teaching students about search engine optimization and the more technical aspects of developing a website.  And many schools tend to spend even less time teaching basic marketing principals.

This was a major struggle for me when I first graduated from McMaster University and Humber College and entered my career. I felt like my technical skills were well-rounded but I knew I didn’t know how to apply them in a way that someone would offer me a job for money.

It wasn’t until I met these 2 brothers who co-owned their own business and who were super smart marketers, that I started to understand how to take my understand of web design (and a bunch of other multimedia practices) and really create a web site so that it functioned as a primary marketing vehicle for business.

That’s really why I started writing and journaling the experiences I’ve had working for myself.

If I can play any part in sharing even a small nugget of knowledge or information that could help another young person find their way into a multimedia and digital entrepreneurial career path… I’ve won!

So listen, I’ve got a lot of ideas about what I’d like to write about but I’d still like to hear what you think. You can either write to me on my contact page or leave a comment at the end of this post. I’ll share case studies of my work, the strategies I use to find clients and process & techniques I use to make my various multimedia and digital marketing work.

And if you’re feeling really awesome you can join my email newsletter. (Maybe I’ll even show you how I make graphical HTML email templates).