Vancouver CPA | Be Careful with Contractors over Employees
Vancouver CPA has had vast experience with a lot of small businesses dealing with the concept of contractors versus employees.
There can be psychology in how an entrepreneur works and become successful. The psychology in fact is just the fact of the matter that they may potentially be wired the right way because they are good at influencing people and allowing those people to buy into what they are saying. There influencing their employees, they have a tendency to stay on task with their mission, their vision, and their problems. As well, they are good at getting people to trust them and buy their products.
Successful well accomplished entrepreneurs whose used to being able to persuade people will be up against a tough task when it comes to the CRA. The Syrian fact views them with the same ruling over and over and over again. What this means is the fact that they don’t care who you are.
The argument that these people who are working for me and are in fact contractors, not employees does not necessarily hold water until proof is shown. Often that proof comes in the form of not necessarily a interview so much as it is an inquisition.
The CRA is in fact going to isolate a couple of the so-called contractors and asked them in the neighbourhood of 40 to 50 questions. They will deal with the fact that what the CRA asked them is going to have to be taken into consideration by them, says Vancouver CPA.
Then what’s going to happen is the CRA is going to reserve judgement over this for a while. Then they are going, if they feel as though you are guilty, send you a very big bill, sometimes in the neighbourhood of tens of thousands of dollars. Consider the fact the sole purpose of the CIA is to be a judiciary platform for the government.
A lot of questions will be considered in terms of what is going on with contractor? Are they responsible for their own training? A lot of the questions are going to be do they train themselves? Can they hire a placement to do their job? Are they insisting on that particular person doing the particular work?
Auditors will ask, does the person have any other clients? Can they hire replacement question is a huge question that the CRA will almost always ask. Another questions or whose training them, etc. Vancouver CPA says be ready for in the neighbourhood of 40 to 50 questions and an inquiry that could potentially be hours long.
If the CRA feels as though you are working in terms of contractor versus employee, they are prepared and no all of the questions to ask in order to get to the bottom of what is actually happening from within the business.
Make sure that you are within the proper legal parameters.
There are a lot of important factors when it comes to weighing the differences between contractors and employees, says Vancouver CPA.
Consider the fact a lot of clients should be very pragmatic on this issue. When the questions that you may to need to think about is do you have one contractor that you are paying a few hundred dollars a year to? Maybe there comes with a lot of risks in that particular scenario. Insist on being from attic on evaluating this right risk. What’s the aggregate amounts that you are paying the contractors, is something that you’re also going to have to think about. The CRA auditors are very diligent and usually even ignore about $500 or less than. They usually have a five-part our threshold in their audit procedure. But however if you’ve had several thousands of dollars a year… For example 50 or 60 or hundred thousand dollars in payments to unincorporated contractors, you’ve been doing it for years, that’s when the risks start to get very high for you and the contractors.
There are a couple of major factors that you are going have to take into consideration when mitigating the factors between contractors and employees. You have to think what is going on with the so-called contractor. Wonder whether they are responsible for their own training or not. Potentially what happens is they might even train themselves.
Can they hire a replacement to do their job, or are you, as the employer insisting on that ticket a person doing that particular work, asks Vancouver CPA.
This is something that they can do, they can collect tax. They can also say that they are going to have to pay the withholding tax, although that doesn’t generally happen very often. The Canada revenue agency doesn’t often go after the withholding taxes. It’s just not worth it to them as is not very much money. What they are going to do however is they are going to go after the biggest fish, i.e. the biggest forms of tax. These two biggest single forms of tax are the CPP, and the EI.
Vancouver CPA says what will happen is you have to pay the CPP and the EI that you wouldn’t have deducted from the checks. You also have to pay this retroactive back for potentially years consider that for a moment. That is hundreds or thousands of dollars that you will have to pay to the government retroactive for years on end and they will ask you for both sides and the employee and employer sides.
Consider the fact that will be five or six or $7000 per employee, plus penalties and interest, multiplied by the number of years that you haven’t paid. Now you are potentially on the hook for hundreds of thousands of dollars, if not for sure tens of thousands of dollars. Make sure that you are not being a detriment to your small business.