How to work as a contractor?

[ExtraSlow]

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Otherwise, typically overall pay once everything is factored in is better as an employee and you get stability.

Agree the advantage of being a contractor is virtually eliminated now. Employee is more advantageous in many cases. However, OP doesn't appear to have an option, and in that case, contracting as an SP or INC is fine.

[msommers]

Is all that PSB fear mongering over yet? It's been awhile since I was contracting but the CRA was really talking baout going after anyone consulting with just one client.

[sabad66]

For rates i've heard you should go for at least 1.5x your base hourly rate equivalent...closer to 2x if possible.

So for example 100k salaried employee is approx. $50/hr equivalent (100,000/2000 hours per year).

So 1.5-2x that would be $75-100 hourly rate as a contractor to be equivalent to 100k salaried.

[HiTempguy1]

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Agree the advantage of being a contractor is virtually eliminated now. Employee is more advantageous in many cases. However, OP doesn't appear to have an option, and in that case, contracting as an SP or INC is fine.

I'm not telling him not to do it. But I wouldn't view it as an advantage.

One of the HUGE benefits I see from contracting is it can quickly expose you to many different roles and aspects of the industry your in, its like job hopping on steroids because its expected of you to do that. Meet lots of people, gain some good skills, certainly can be beneficial.

I've just never seen the long term benefit.

[Hero_X]

hey guys,

so a bit of an update (not secured offer but some mentions):

1) the hiring manager mentioned it would be a contractor position, but i would be through an agency called 'design group'. Does this change anything?

2) the hiring manager mentioned a rate, when talking about salary, but there's been no official offer with it. In the event they do make an offer with that particular rate, would there be any room for negotiation?

I definitely am desperate af to get a job BUT i still don't want to be fcked if being a contractor is gonna end up costing me too, versus staff position.

I definitely want to try to negotiate a bit more, because i will have to move for this position. But, i don't want to piss them off and have them just pull back altogether.

Any advice on this?

[ExtraSlow]

Design group is a staffing agency. So you'd be an employee of thiers. Easy peasy, and they ll take thier cut.
http://www.dg.ca

[killramos]

Yup just a pimping agency.

Sounds like a decent gig to get back working to me.

[ExtraSlow]

+1, do it. Experience and hours worked are valuable.

[Hero_X]

hey guys,

thanks for replying, but the guy had mentioned 'contractor work' through design group. So am I still a contractor and DG just pimps me out? Or am I just an employee under DG and the contract is with DG?

Sorry guys, i'm super new to this so pardon the many questions.

Also, any advice on the $$$ negotiations, if any?

[ExtraSlow]

My guess is DG has a set rate, and you have no input or leverage. But it's worth asking DG these questions. THEY are your employer.

[killramos]

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Also, any advice on the $$$ negotiations, if any?

I don’t mean to be crass but if you are out of work for an extended period you aren’t exactly in a fantastic position to negotiate. I am sure whatever they are offering you is better than EI. Once you make yourself invaluable to them and prove yourself you can talk about upping compensation.

At least that’s my opinion, it’s a buyers market and you are the product.

[Hero_X]

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I don’t mean to be crass but if you are out of work for an extended period you aren’t exactly in a fantastic position to negotiate. I am sure whatever they are offering you is better than EI. Once you make yourself invaluable to them and prove yourself you can talk about upping compensation.

At least that’s my opinion, it’s a buyers market and you are the product.

You're absolutely right. I am working right now but it's nothing compared to engineering.

I guess my main concern is getting shafted in pay, due to the costs of being contractor and paying for my own insurance, moving to edmonton, etc.

I'm not trying to be ungrateful or greedy lol, i just want to make sure my situation improves.

I'd be happy with the job, i just wanted to get an idea.

[firebane]

You have to be careful with agencies as some of them you are paid through them and work through them.

Other agencies are just a mediator and are there to find you as a contractor to pimp yourself out.

Look into this when dealing with these places as I ended up with a few offers and it was going to be a pimp myself out style.

[Sugarphreak]

...

[stillworking]

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There is less advantages to incorporate these days, but there are 3 that are still fairly compelling;
1) You can take your wage in dividends which get taxed a bit less overall if you claim the small business tax deduction
2) Your company is a separate entity, allowing for incredible liability protection
3) It makes it much easier to work with multiple companies

+1 for the liability protection.

Also, If you set corporate year end for Jan 31 you can split any T4 income you want to claim over two calendar years to manage tax brackets.

Doing all the admin and bookkeeping is a hassle, but if the rates (EDIT: and client) are good, it is worth it.

[ExtraSlow]

I'll add 4) you can manage the timing of your income, which is very helpful if your work is periodic or seasonal, or you like to take longer vacations.

Say you earn 100k one year, but plan a 12 month tour of Asia the next year. With SP, you pay full personal tax on the 100k. With INC, you could pay yourself 50k each year, and pay very low tax rates.

For a person with childcare expenses, and a small RRSP contribution, you pay basically zero tax under 40k or so.

[HiTempguy1]

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I'll add 4) you can manage the timing of your income, which is very helpful if your work is periodic or seasonal, or you like to take longer vacations.

Say you earn 100k one year, but plan a 12 month tour of Asia the next year. With SP, you pay full personal tax on the 100k. With INC, you could pay yourself 50k each year, and pay very low tax rates.

For a person with childcare expenses, and a small RRSP contribution, you pay basically zero tax under 40k or so.

Wow, this is super helpful to know, plus the Jan 31st year end.

My business is looking to be very seasonal. I could see going to a corp next year, so this is all very good to know.

[ExtraSlow]

Yeah you can have any year end you want. I use Sept 30.

[Hero_X]

Thanks everyone for all your input.

I wanted to ask few questions in regards to Design Group / contracting:

1) DG told me they will deduct CPP/EI.. is this supposed to happen? If i'm not an employee...then can they remit CPP/EI payments on my behalf? When speaking to an accountant today, she got confused as to how I would be a contractor but still having DG remit my CPP/EI.

2) For those of you who have done contractor work as sole proprietor, is it advisable to get an accountant to help ensure most savings? I spoke to an accountant today and she mentioned that regardless of going sole proprietor or INC, I would be able to claim expenses. (She gave me a list of things, as well as certain things that can only be claimed 50%). Is this really true or am just dealing with someone misinformed? (Note this was just an initial consultation).

3) For the GST remittance to government, do you guys do it at the end of the year or quarterly or..?


Thanks again for all your advice guys, means a lot to me.

[ExtraSlow]

You need to keep talking to DG. They do this for hundreds of people, and they know exactly how this works. My suspicion is that you are an employee of DG.

As for what you can "write off" it's basically the same between sole prop and incorporated. Legit business expenses only.