Tax Savings When You Leave a Corporate Job and Become Your Own Boss
Steps to save on taxes when moving from a corporate job to self-employment in Canada or the US: clean records, mileage logs, home office costs, equipment, and tax planning.
Moving from a corporate job to self-employment is a tax shift. As an employee, much is handled for you. As your own boss, you can often claim more business costs, but only if you keep clean records.
This guide covers practical steps that work in both Canada and the US.
1) Lock down your employee records before you switch
Keep a clean folder with:
- final pay stubs
- your annual tax slip (T4 in Canada, W-2 in the US)
- any bonus or stock documents
- benefit statements and receipts (health, dental, etc.)
- any expense reimbursements and what they covered
This prevents missed income, missed credits, and messy gaps when you file.
2) Start a simple record system on day one
Tax savings start with proof.
Canada: CRA requires you to keep records of all transactions to support income and expense claims, and you generally keep records for six years.
US: the IRS says to keep records as long as needed to prove income or deductions on a return.
Basic setup:
- one business bank account or one dedicated card
- one place for receipts (folder or cloud)
- a short note on every unclear purchase so the business reason stays clear later
3) Track mileage and car use early
For many new self-employed people, driving is one of the biggest deductions they miss.
Canada: CRA expects a logbook that shows, for each business trip, the date, destination, purpose, and kilometres, plus odometer readings at the start and end of the fiscal period.
US: the IRS says you generally deduct car expenses using either the standard mileage method or the actual expense method.
The IRS standard mileage rate for 2025 business use is 70 cents per mile.
Use MileLog to keep the mileage log real
MileLog is your iOS mileage tracking app. It is built to reduce effort so the record actually gets done:
- automatic trip logging and easy export, positioned for IRS and CRA use
- no account needed, offline-ready, optional cloud sync, CarPlay auto-start
- trip data stored locally with optional cloud sync
The tax savings comes from one thing: a complete log that matches what tax rules expect.
4) Claim home office costs only when the rules fit
Canada: CRA allows business-use-of-home expenses if the workspace is your principal place of business, or if it is used only to earn business income and used regularly to meet clients/customers/patients.
US: the IRS simplified option is $5 per square foot, up to 300 square feet.
Keep it clean:
- track the work area size
- keep bills and receipts
- keep a short note describing how the space is used for work
5) Handle equipment the right way
A common mistake is treating big purchases like normal monthly expenses.
Canada: CRA explains that you generally deduct reasonable current expenses to earn income, but you do not claim capital property as a current expense, and you often use capital cost allowance (CCA) for depreciable property.
US: for tax years beginning in 2025, the maximum Section 179 expense deduction is $2,500,000 (with limits and phase-outs based on total purchases).
Practical habit:
- keep receipts
- note the business use
- note when the item starts being used for business work
6) Watch sales tax rules as revenue grows
Canada: CRA explains when you must register and start charging GST/HST once you exceed the small supplier threshold rules.
Even when registration is not required yet, tracking revenue from day one prevents a late, expensive surprise.
7) Run your cash flow like taxes exist
When you become your own boss, tax is no longer automatic. Treat part of every payment as not spendable, and keep it separate. This prevents the common failure mode of strong revenue and zero cash at tax time.
Summary checklist
- keep employee tax slips and final pay records
- separate business money from personal money
- keep receipts and short notes for business purpose
- track mileage from day one, with a real logbook
- claim home office only when the rules truly fit
- treat equipment purchases correctly
- track revenue and register for GST/HST when required
- set aside tax money from every payment