CFO services | Hiring Employees
Business owners who have been paying their employees as contractors and effort to save money on their payroll, often end up being crushed financially when CRA finds out and assesses them says CFO services. This is a completely avoidable problem, that business owners can definitely ensure never happens to them. Since 50% of all entrepreneurs are out of business within five years, and 29% of those failed entrepreneurs will say that running out of cash was the reason they had to close their business, entrepreneurs who are trying to increase cash flow in their business by any means necessary are sometimes getting so with less honest means, and itís catching up to them. If they get audited by the CRA, they will be hit with so many penalties, that in and of itself may cause their business to close.
The problem with businesses who started doing this, is that they get lulled into a false sense of security because theyíve been doing it for so long and they have never had a problem said CFO services. This is a problem because just because they havenít been caught yet doesnít mean they want. And the longer they go without getting caught not only increases your chances of getting caught but it also increases their eventual find theyíre going to have to pay when CRA does find out.
The easiest way to avoid this problem is to pay employees properly says CFO service. If they hire an employee and pay them correctly with all the right source deductions, CRA has no problem with it. If they hire an incorporated contractor, itís no problem either. Itís just when a business owner pays contractor who is not incorporated and then no one pays any taxes is when CRA gets upset. The risk is on the owner of the company. Many big successful companies actually avoid hiring unincorporated contractors to completely eliminate this issue. Since it is an extremely easy issue to avoid, CRA rarely takes pity on entrepreneurs they suspect are guilty of this.
Entrepreneurs often believe they will be able to convince CRA to rule the way they want him to rule, because they are charismatic business owners who have been successful in hiring staff and attracting clients, and beliefs that they will be able to talk their way out of this problem. Warrenís CFO services However CRA does not view them the same way they view themselves. Their sole job is to judge entrepreneurs. CRA will look at the situation very logically and do a lot of investigating and due diligence. Theyíre going to call the business and asked to speak to the various people at the business including the contractors to determine if they actually work there and our employees. Theyíre going to talk to the owner the accountant the employees and the contractor. They have a list of over 50 questions that will help them determine who actually works there. Once theyíve made their decision, they will send back the business owner and assessment and there is no appeal.
Entrepreneurs play a dangerous game When they hire employees and pay them as contractors in order to avoid paying payroll deductions says CFO services. It is a completely avoidable problem that can end up costing the business a lot of money in retroactive payments and fines. Business owners should be warned of the consequences of trying to save a few dollars this way, because with this particular issue, the rewards definitely do not outweigh the risks.
The problem happens when business owners hire employees and to call them contractors in order to avoid paying their CPP and EI CFO service
CRA is not a fan of not getting paid the taxes that are owed to them, and they come down very hard on businesses who are caught doing this. Business owners need to know what makes an employee an employee and what makes a contractor contractor so that they can appropriately pay each of their workers and avoid getting this fine.
The biggest determining factor on whether an employee can be called contractor, says CFO services, is if that person has any risk associated with their role. If the contractor is in fact a legitimate business person, is there ever any risk they take on? If thereís no risk to them and they are never at risk of losing money, CRA will tend to look at them as being employees. The second most if someone is an employee or contractor, is how much control does the business owner have over that person. Can the contractor hire their own replacement, what does a business owner require specific person to do that specific job? Are they required to attend staff meetings, are they included in company training sessions? Who sets their schedule? Did they bid for the job, who set the price, they tell the business owner how much it would cost to do the job, or did the business owner tell them what their rate of pay would be? These are the second most important questions that will determine if they are actually employee or contractor.
When a business owner can figure out if they have been paying employees incorrectly, itís a very easy fix assures CFO services. Switching employees who been paid as contractors back can be done very easily, the most important thing to do is to make sure that those people donít get upset that the rules are changing on them. A good way to do this, is by waiting until they are due for a pay increase, and then saying the changes are done as a byproduct of that pay increase. A business owner may also tell those people that they will be eligible for a pay increase if they incorporate themselves. By increasing their wage, a person may not be upset at incurring the costs of incorporating. This way a business owner can immediately minimize this risk, and avoid getting that fine in their business.