Vancouver CPA | Thinking about How with Contractors versus Employees
Hopefully, says Vancouver CPA, despite the fact that there may be a lot of new business owners, that are out of money in terms of revenue and in the bank, that they still follow and abide by certain ethical principles of business.
Some of the things that they have to think about, says Vancouver CPA is in the number one biggest and mitigating factor is the risk of profit and lost in their business. This is so important in that obviously you’re going to want your business to succeed instead of fail is to make sure that you understand the differences between a contractor and employee.
You have to think too, what is going on with the contractor question mark are they responsible for their own training? Do they as a matter fact train themselves? Should they in fact hire a replacement and can they even do so, in order to do their jobs, or are they insisting on a specific and particular individual to do that type of work?
Vancouver CPA says that they may want to consider the fact that they can collect tax. One of the things that they can use to say is that they are going to have to pay the withholding tax, in terms of the Canada revenue agency. However, the Canada revenue agency often doesn’t go after small peanuts. The withholding tax is not a lot of tax, and they don’t usually concern themselves with that.
They do however very much concerned themselves with the CPP and the EI tax. You are going to have to pay the CPP in the EI the you would’ve deducted from their checks. The payment is going to have to be, retroactive back for potentially years. And they will ask for both sides, the employees and the employers. This can amount to a very prohibitive some, in terms of five, maybe six, maybe $7000 or more, per employee, plus penalties and interest, multiplied by the number of years. Again that can be tens of thousands of dollars, if not more in penalties, and fines and can potentially bury a business.
Clients should be very careful and very considerate with this certain aspect. Do you have one contractor that you are paying a few hundred dollars a year for? That may not necessarily amount to a lot, and although there are a lot of risks, those risks may be minimal at best. Be pragmatic on considering the risk how much are you going to be paying the contractors that have built up? The CRA has a specific formula where they will be able to take care of all of your problems assuming that there is a problem with remittance and finance.
Consider the fact that there might be a time when a lot of the risks are going to technically going to be get a little bit too high.
Often times, advises Vancouver CPA, what have any is big companies will have to and consider trying to push the lock and stick your nose into something where they feel as though they have a lot of clout with. However, the Canada revenue agency does not hold any weight with people that are trying to be bullies, particularly big business.
As well, says Vancouver CPA. Business owners will visit CPAs when they are about to or have just gone out of business. They will only visit charter professional accountants when it is the 11th hour and often times not before. Up until that they feel as though that they are quite capable of doing all of the financials by themselves and will be able to succeed in their business without any exterior help.
Contrary to this, 70% of people will fail at very easy financial terminology tests, says Intuit, the maker of QuickBooks. With that in mind, this is often another minute getting factor of why there are so many failed businesses. It is because people think they can do it on their own without the help of a charter professional accountants advice.
One of the things that a charter professional accountant will discuss is incorporation. Oftentimes what will happen is you will be able to properly incorporate in a matter of simply one day. As well, this will give you the optics of very honest, very ethical business, and one that the Canada revenue agency will potentially enjoy working with.
Often in psychology, the entrepreneurs simply have a mind for influencing people. This is potentially why they are very successful. They will often stay on task, with their mission, their vision, and their problems, and they are very good at getting people to buy their services or their goods from them.
As well, what these small business owners with this form of attitude, has a tendency to be very arrogant. As well, they will not be able to take advice from a lot of people, says Vancouver CPA and they will feel as though they can do it all by themselves.
Unfortunately, it is a very prudent factor that businesses often need a village in order to succeed. They need a lot of people on their team with which they can focus on different aspects of business and their company. Oftentimes humility often win out in terms of business and it would be a good idea to make sure that you have a lot of professionals on your team and on your side.
As well, businesses will come finally to visit a charter professional accountant in the 11th hour and say that they have been in business for one, five, 10, maybe even longer years and they’ve never had any problems with the Canada revenue agency. Now what is happening is the can revenue agency is coming at them for potential hiring of employees over contractors.
Big companies will bring someone on as an employee and CRA loves that as they’re going to get the tax.