How to work as a contractor?

[killramos]

1 Sounds like you are a contract employee

2 Every class of capital expense has different ways it can be depreciated and claimed as expense against business income. The accountant is definitely not missinformed. You can read up on all of this on CRA website. Contrary to popular beliefs business write offs are neither a free for all nor a perk, it is intended to be for expenses you incur as part of conducting your business. https://www.canada.ca/en/revenue-age...-expenses.html

3 When are you charging GST? I bet this is something DG takes care of.

I agree with slow, you need to start talking to your employer (DG, or the company you are contracting to) not random people on the internet.

[themack89]

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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.

No. They should be ensuring you have a good standing with WCB, and making sure you have appropriate insurances. But beyond that, you have to take care of your own CPP/EI and they have nothing to do with it.
You invoice them, charge your GST, report and remit accordingly. If you pay yourself wages or a salary, then you'll do the whole CPP/EI thing on your own. No problemo.

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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).

In my experience doing the books for a small corp, accountants are mostly helpful for keeping you out of hot water with the CRA, doing things tax efficiently, and prepping your financials for an audit or review.
Generally speaking, you can do two things: write off as expense, or put on the balance sheet as an asset.

Example: Purchase new computer $5,000

Option A: Expense at $5,000.
Result: Lowers your income for the year. Pay less tax.
Other Consideration: You spent $5,000 on computer which lowers your equity on balance sheet, makes your company look worse. When you go to sell, you will have to book as misc revenue, and you'll get taxed.

Option B: Book as Capital Asset at $5,000 w/ associated depreciation or amortization expense.
Result: Improves balance sheet by bumping up assets. Do not get immediate reduced income taxation benefit.
Other Consideration: You can write off the value of some of your assets in the form of depreciation. Provides flexibility between reducing income tax and keeping balance sheet healthy / realistic.
See link: https://www.canada.ca/en/revenue-age...-property.html

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

You can change your GST Remittance info. To find your default remitting information, you should login to your CRA Account, or give them a call.
GST-20 Form - Change your reporting period. https://www.canada.ca/content/dam/cr.../gst20-18e.pdf
GST-70 Form - Change your fiscal year. https://www.canada.ca/content/dam/cr.../gst70-15e.pdf


Am I credible? I do the books, payroll, financing, and work with my accountant for my earthworks company.

[lasimmon]

Sounds like you are an employee of DG and they have the contract with the company.

This is very common.

[Hero_X]

Thanks everyone!

[ExtraSlow]

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Sounds like you are an employee of DG and they have the contract with the company.

This is very common.

and very easy for you. No hassle.

[Jlude]

1. If they're deducting everything, then you're not a contractor. Figure it out.

2. I didn't read the thread, but where do you plan to go with this? Are you going to stay with this one company, or contract to others, but never one at a time? Or are you going to be expanding and possibly growing this company? I don't know how much you're making, but if it's low-mid 6 figures, you should setup a holding company, transfer shares of your DB contracting company to the holding company. Setup another company owned by the holding company also for other stuff. Holding company should have an investment portfolio that you transfer your profits/savings into at a low tax % and the other companies can contain various things. Setup another company, sell that company your house and rent it back to your consulting company. You're now writing almost 100% off, even your food. Start saving every receipt!

I probably just took that too far, but hopefully you get the picture.

3) Do it on time, because the gov will charge a vig. If you have self control and are talking large enough amounts, you can put it in the portfolio, safely clip 5% and then pay your taxes when you need to. Just starting out, pay your taxes quarterly.

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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.