Vancouver CPA | Discussing the Matter of Contractor an Employee
Vancouver CPA says that they must be very cautious in terms of what the Canada revenue agency is going to ask you, your contractor, your employees, if in fact they feel as though you have retained a contractor ask as an employee and vice versa.
The process is first of all an improper is a process of cloak and dagger, as they may phone you, or in fact come in personally to your business, never introducing themselves or never knowing that they are from the Canada revenue agency’s and our representatives. If in fact you are guilty of retaining a contractor as an employee, this could be a very real fact, and something that you will have to face.
Consider the fact that they will ask many questions, says Vancouver CPA, such as insurance, who’s paying for the training, and other such considerations. These processes, will potentially last 40 or 50 questions long and hours of interrogation. The word interrogation is used as a term of alarm, as they aren’t usually common and friendly chats. They are here in the mean business, as the sole person purpose is to make sure that they are getting entertaining the tax for the Canada revenue agency and that they get what they have coming to them.
Consider the fact that you are not going to be able to confuse them, or appeal to their good nature with a passionate plea, or a logical argument based on whether you have followed the rules and retained a contractor as an employee. Consider the fact that they are a big government action, and they have heard it all before. All they are looking for is what is coming to them. They don’t quite care frankly if you are losing money, or in risk of losing her business, or what have you. They just want the money that is owed to them.
In that, often what happens is, says Vancouver CPA, small businesses will go to charter professional accountants on the 11th hour of losing their business or accruing such major penalties. Often times as well this will handcuff a lot of what the charter professional accountants can do. They may or may not be able to get you out of your problems with the Canada revenue agency.
Consider the fact that auditors will get involved as well, as they will ask if the person has any other clients? As well, the person who is to be interrogated, the contractor in question, will have to go through a very big list of 40 to 50 questions. For example, some of the questions involved will be does this person have any other customers? Does this person have any other clients? Does this person have insurance? What costs are they responsible for from within the business that has retain them? Are they buying materials and supplies, for either their business, or the business of the owner of the person that has retain their services? Can they hire a replacement is one of the questions that is most often asked.
Vancouver CPA reassures you that often you know whether you have risk involved with your business or not. That is just a part of knowing your business and working well within the numbers and within what is going on with your business. At the same time, you need to reduce the risk level and you have to switch people from contractors to employees. This can be something that costs you extra. As well, this is not going to be very well received by the people involved. They are so used to being contractors for a lot of their life, and don’t necessarily like change.
Often times will happen is contractors will feel as though you have changed the rules on them and they feel misled and he will do. What you can do to get out of this situation, says Vancouver CPA, is you can change the terms in conjunction with an incremental increase or raise, and that will be a good time to move them as the change for their classification and contractor will be in conjunction with the potential raise. They will feel as though they are very excited that they are getting more money and that their hard work is paying off and be noticed.
As well, says Vancouver CPA, if you can tell them that you guys should be making more money by incorporating your business. Again, consider the fact that you should be doing this in conjunction with our raise, so that feelings are hurt, and nothing stays out of the ordinary.
Think about the fact that long time entrepreneurs who actually know what they are doing will, in the event of being in arrears with the Canada revenue agency, go through a very big dramatic process and crying process and pleading with the Canada revenue agency that they didn’t know any thing about it, or that they were late for some reason or another.
The Canada revenue agency does not take very well to any sort of consideration why they may or may not have had time to pay the bills. The Canada revenue agency has in fact seen it all from many people, and can weed out who is telling the truth, and who isn’t.
Then what you will have to consider is the fact that the Canada revenue agency won’t necessarily touch the withholding tax. That is considered small in the grand scheme of things. Normally, they will leave that alone. However, what they will go through over is the to big tax gatherers. Which is the Canada pension plan, and the employment insurance. You’ll have to in fact pay the CPP, and the employment insurance that you would’ve deducted from there checks, retroactive back from potentially years.
They will ask for both sides. The employees and the employer’s. That is thousands of dollars per employee plus penalties and interest, multiplied by the number of years.