Vancouver CPA | Happy to Be an Incorporated Company
Vancouver CPA says the differences between successful will accomplish entrepreneurs and those that have proven to be a statistic of failure can be very big, yet subtle.
A very good reference is the novel by author Michael Gerber. The book is called email. Gerber says “the fatal assumption is if you understand the technical work of a business, you understand a business that does that technical work.”
Statistics are grim in the business of entrepreneurial ship. 50% of all small businesses are out of business in five years. Likewise, 29% of these failed businesses will cite that they ran out of cash as there reason for losing the business.
Business owners will come to charter professional accountants after they have been crushed or about to be crushed financially by retroactive payroll remittances, penalties, and interest because the contractors have been deemed employees by the CRA.
Often times will happen is business owners will then formulate a big sob story, stating that they have been in business, for one or three years and didn’t know of this process and asking to give them a break.
Likewise, says Vancouver CPA the older entrepreneurs who have been in their business for quite a long time will state that they have been in business a long time, and they know the ropes, and it is never their fault, so therefore they should be released of the problem. Often times will happen is particularly with the seasoned veteran entrepreneurs, they will say that they have been dealing with the Canada revenue agency for years and they haven’t had a problem yet.
This can be likened to a smoker, says Vancouver CPA. They’ve been smoking for years, and they haven’t had a problem yet. But you know was a matter of fact that it is eventually going to come to have major health problems.
What can happen however is big companies will bring someone on as an employee and the CRA loves that as they are going to get their fair share of tax, as is there duty and the mandate. This process is cut and dry, and easy. Then if you’re being on a incorporated Contractor, this is also easy and the CRA doesn’t care about that at all and will turn a blind eye. The CRA will eventually and always except that relationship as well. However, all the risk is when you hire an unincorporated contractor. This is where all the problem start and all the risks are. Big companies are not going to hire unincorporated companies as most people in business, particularly the big conglomerates know that you never hire unincorporated companies.
Look into the psychology of entrepreneurial ship. They just seem to be wired the right way because they are good at getting their way from people. The can influence their employees to buy into their system, the procedures and their rules. They will stay on task with their mission as their mission is to have financial and time freedom eventually, etc.
Vancouver CPA says that a successful well it accomplished entrepreneur is super adept at getting their way, and getting their subordinates, and their clients and customers to do what they like to do. They are not used to not getting away. Often times what happens is when they come up against a bigger and more formidable full, such as the Canadian revenue agency, they will go into fits of pity and they will say that they didn’t know, that it was not the responsibility, etc. They will state the fact that they will go into this big plea or big emotional speech mentioning that it is never their fault.
However, the Canada revenue agency’s sole task is a very judicious one and one that you simply collect taxes for the government. They have often seen it all before as well, the plea, and the crying, and the arguments to the contract to the contrary. However, what will happen is if you are deemed suspicious company in that you have retained employees, as contractors or vice versa, the Canada revenue agency, unbeknownst to you, will phone and talk to either yourself or your employees or your contractors. They may also specifically and in person come in to ask you questions. Etc. these interrogations can be in the neighbourhood of 40 to 50 questions long and can potentially last hours.
They will be very curious is what is going on with that so-called contractor. They need to know if they are responsible for their own training or not or if the small business owner is going to train them. Vancouver CPA wants to know if they are in fact going to train themselves and take it upon themselves to get their ticket. As well, Vancouver CPA will see and wonder if they can hire a replacement to do their job if that particular person is missing. Are you on the other hand, insisting that the particular person is doing that particular work?
As your small business owner, you will need to know that you in fact have risk from within your company. If you want to reduce the risk level, but at the same time you are switching people from contractors to employees, bear in mind that this can be of a specific cost to you, and the business, likewise, what will happen is the fact that these contractors will not take well to your decision, as typical of human nature, they do not like change, and they have been a contractor for years and years. They will feel as though that you are pulling the wool over their eyes.
Which need to do in this case, is you have to make sure that it is contingent on a raise for your contractor. That way, you will be able to move them and change their classification from contractor to employee care, and it is very well received. They will view it as a raise, and a distinction of their work, rather than something negative.