Vancouver CPA | All Need to Be Cautious and Careful with Employers
Vancouver CPA says that there are many considerations when you talk about contractors versus employees. However, they very careful in this exercise as it can potentially bring down your business.
If the CRA, which is the Canada revenue agency, feels as though you are retaining employees when in fact they are contractors and vice versa, it scanned mean tens or hundreds of thousands of dollars in fines, which is detrimental and potentially fatal to your business.
In fact, there are successful, well accomplished entrepreneurs, who are quite used do and adept at persuading their subordinates, their employees, their clients, their suppliers, etc. However, in contrast, the CRA views them as does the same ruling over again. The argument that the people who are working for me are in fact contractors and not employers is one that is not often beaten.
They are in fact calling on this issue that a lot of people just don’t know. Vancouver CPA says that they are going to gather details in writing, on a phone interview, or an on-site interview, and you’re not going to know that they are the CRA. They will do it incognito and not introduce themselves or not say anything at all in regards to their affiliation with the Canada revenue agency.
They’re going to isolate a couple of the so-called contractors and asked them the questions. So each not just what the entrepreneur or accountant says they will eventually get to the actual contractors to. Then the CRA will see that these contractors are in fact employees.
The CRA is going to send the owner in that case a very big bill with many zeros behind it. What that means is this could be the factor you have to dissolve your business after paying this bill.
Often times clients should be very careful in this scenario. Do you have one contractor that you are paying a few hundred dollars a year to? Or maybe there are some risks however minor. Make sure you’re being from pragmatic on evaluating that risk. What is the aggregate amount that you are paying the contractors? The CRA auditors will not worry too terribly much about $500, often they’ll turn a blind eye. Usually they have a hot 500 are threshold in their audit procedures.
However, if you’ve had several thousands of dollars a year and potentially 50 or 60 or hundred thousand dollars of payments to unincorporated contractors, as well you been doing it for years, that’s when the risks start to get high and you will stick out to the Canada revenue agency in terms of investigation. Vancouver CPA wants to make sure that you do in fact stay very careful and very safe so that you can keep your business going for a very long time.
You might in fact know that you have a risk from within your business. You are working towards mitigating that risk but same time you need to switch some people up.
Vancouver CPA says here are many factors that can be a conservative factor to the fact that the Canada revenue agency might consider you for investigation of whether you have retained contractors versus employees. Or vice versa. You have to be very careful in that you have taken to heart everything and considered all factors so that you don’t run the risk of paying hundreds of thousands of dollars in damages and penalties.
Oftentimes what will happen is auditors will ask many questions so as to try and get to the bottom of the issue of whether this person is in fact an employer not. Some of these questions may in fact be wondering if the person in question has any of the clients. Does the person have any other customers? Does this person have insurance? What costs can they potentially be responsible for? Also, are they buying materials and supplies? That is usually and potentially a dead giveawayfor the Canada revenue agency. Also, one of the biggest questions that they will ask as it is legitimately huge, is what costs that they hire a replacement?
Vancouver CPA says the questions will go on and there may intentionally be 40 to 60 of them. With a question. Lasting hours. Bear in mind that what happens is if in fact after, the CRA official an auditor return and preside over and think about their decision, if the person and the company is found guilty, there could potentially be tens or hundred thousand dollars in damages, and penalties to not necessarily the employee or the contractor, but the employer in the business.
Consider big conglomerates and big companies, says Vancouver CPA. They will often bring someone on as an employee. In this case, the Canada revenue agency will love it as they are going to get their fair share of tax and it’s quite easy. Then, if you can bring on an incorporated contractor, the Canada revenue agency doesn’t care about that either, and they will accept that relationship as well.
All the risk however is when you hire on an unincorporated contractor. This is where the problems start. This is where all the risk begins. Big companies are not going to hire on incorporate companies that is rule number one. The old adage is don’t hire unincorporated companies!
Even, successful, well-rounded and well-versed entrepreneurs who are very used to having their way, and persuading people the CRA won’t budge on. What happens is these entrepreneurs will come in with a wonderfully dramatic speech, full of emotion and the CRA has in fact seen it all before. This is something that everybody can do and as a matter fact has done. They’re going to gather details, says the CRA, in writing from that person and their and get it from a phone interview or maybe even a potential on-site visit and interview. They are going to then interview a couple of the so-called contractors.