Accounting methods

Accrual method
In most cases, as a self-employed person you report business income using the accrual method of accounting. With this method, you:

• report your income in the fiscal period you earn it, regardless of when you receive the income; and
  
  
• deduct expenses in the fiscal period you incur them, whether you paid them in that period or not. Incur usually means you either paid or will have to pay the expense.

As income from professional activities is business income, you report it using the accrual method.

Cash method
If you are a self-employed commission sales agent, you can use the cash method of reporting your income and expenses, as long as it accurately shows your income for the year. Under this method, you:

• report income in the year you receive it; and
  
  
• deduct expenses in the year you pay them.

Forms and publications

• Business and Professional Income guide (T4002)