Vancouver CPA | We All Need to Exercise Caution
As I Vancouver CPA says that business owners will come to the CRA’s and say they’ve been in business for a considerable amount of time. They then say that they haven’t had a problem yet with the Canada revenue agency.
However one of the examples that a lot of people will use is a smoker who smoking for a considerable amount of time as well who, “hasn’t had a problem yet”, the problems are only about to begin. Eventually, all of that problem and those consequences will eventually catch up to them. The results in fact can be catastrophic. In a work until it doesn’t work all because of consequences. You are in for a very challenging time, much like the smoker who eventually will fail in their health. This is a very small sample size of success but it is in fact true.
But that happens, says Vancouver CPA, is a lot of a companies will bring some on on, as an employee. If it’s an employee that they have retained, the CRA finds it wonderful as that will just be another person that will be paying taxes, and it’s easy. Then if you bring on an incorporated contractor, the CRA does in fact care about that as well. They will accept that relationship.
Here’s were all the risk comes in. It is when you hire an unincorporated contractor. So, remember this, employee retention, is no problem for the Canada revenue agency. An incorporated contractor is also no problem for the CRA. The problem comes where you are now and unincorporated contractor. This is where in fact all the risk begins and will definitely continue. The big companies will use the old adage that you don’t ever higher unincorporated companies. The incorporation is the potentially gold seal or gold standard of ethics in business.
There is potentially psychology in the entrepreneurial ship this psychology, says Vancouver CPA. As it may not come to anyone’s surprise, is at the entrepreneurs and the business leader are just so because they are good in influencing people. They influence their employees, and they stay on task. They consider and work very hard for their mission, their vision, and your problems. They are good at getting people to purchase their products, and believe in their vision as well as their company. They think that if you make a very passionate, logical argument to the Canada revenue agency in regards to retaining contractors as employees that they will be able to win the argument. They will feel as though they are safe. Unfortunately this is not true as the Canada revenue agency has heard it all before they think that if they come in to the office and make a great argument that somehow the CRA is going to have to buy into that argument and because that company is making money bow to their whims.
That is just not so and certainly not how it’s going to work.
There are two major factors, in considering the argument between contractors and employees, says Vancouver CPA. The number one consideration is the fact that you have to assess the risk of profit and loss.
The second biggest important factor is you have to control what’s going on with this particular contractor.
Number one, it is the single most important issue when we talk about risk of profit and loss. There’s a lot of considerations on specific questions that they are going to ask, in regards to the CRA. A lot of the considerations are insurance and customers, etc. But what is the risk of profit and loss? If you in fact profit from her prison from a business it goes well. If you do not profit from a business while then you lose money and potentially your business. They look at the so-called contractors and ask if there is a risk that they could potentially lose money
Control, states Vancouver CPA, is the second most important factor consider what is going on with the so-called contractor. Are they responsible for their own training? Do they train themselves? These are all questions that need to be considered and covered when the CRA asks them. Can they hire replacement to do their job? Are the and you insisting on that particular person doing that particular work?
When one gets a visitor from the auditor, be prepared for questions such as the question of clients, insurance, the costs, etc. The auditor may ask is the contractor buying materials and supplies? One gigantic question that is often very seldom looked over is the fact that they want to know if they hire a replacement. Who’s training them? How are the hours and the schedule set.
Another odd consideration that the CRA definitely think about is, warns Vancouver CPA, did they bid on the project to begin with or did you just tell them how much they’re going to make? All the questions are going back to what’s the risk of profit and loss to this person, if any.
If in fact the Canada revenue agency goes back to their office and finds that you may potentially be guilty of having employees instead of contractors, they may come to you and bring you a very big bill! As well, they generally going be going over all of your CPA and EI remittances. This means that you’ll have to go back and you have to pay what you have not been paying the past months may be years.
A consideration is clients should be very careful and cautious. Think about the fact that if they have one contractor that they are not paying lots of money to, potentially only a few hundred dollars a year, is that going to be a major risk? And maybe there are some other risks? Make sure that you are pragmatic about evaluating this risk. What’s the aggregate amounts that you are paying the contractors?