How to get Incorporated? IT professional PR status

[RBCAN]

Hi Seniors,
I just moved from USA to Canada with PR. I am into IT Consulting and looking for jobs as contractor. The recruiters I spoke to some recruiters but they only want to work at incorporate rate. I called 1 place. They said its CAD1500 which includes expense recording expenses etc and additional $$ to file taxes at year end.
The other place (sounded Russians) said CAD 500-600.
Additionally if you work in different province then you have register your company in a different province as well.
Usually IT contractors keep moving from town to town so that may add complications.

I am looking for guidance on the best way to deal with this and tax filing at year end.
Please help!!

 

[torontosm]

Hi Seniors,
I just moved from USA to Canada with PR. I am into IT Consulting and looking for jobs as contractor. The recruiters I spoke to some recruiters but they only want to work at incorporate rate. I called 1 place. They said its CAD1500 which includes expense recording expenses etc and additional $$ to file taxes at year end.
The other place (sounded Russians) said CAD 500-600.
Additionally if you work in different province then you have register your company in a different province as well.
Usually IT contractors keep moving from town to town so that may add complications.

I am looking for guidance on the best way to deal with this and tax filing at year end.
Please help!!

Incorporate a Federal company and you can use it across provinces. I would suggest the services of a firm like A&P Intertrust who will handle the entire process for $600 or so, or you can do it yourself and save $150.

 

[NetMecca]

The location where you incorporate depends on your business address (for provincial). There is no reason why you cannot do business with people in other provinces if you are only incorporated in one province. The major downside of provincial is that you only get name protection in that province.

Incorporating federal only really offers you name protection across the country as a benefit. When you set up shop ( have a business address) in any province you still have to register as an extra-provincial corporation in that province and pay fees for that anyway. This could add up fairly quickly to thousands every year.

You can also explore registering as a sole proprietor, which gets you a business number and is generally considerably less expensive and simple to do. You can usually do this yourself easily with a few forms. The down side is that you are personally liable for your business activities. Taxes are also based on your personal income, so you might not get the benefit of small business tax rebates. I would suggest you spend a little money getting advice from an accountant and a lawyer to make sure you tailor your business setups according your own needs.

Good luck

 

[Wonderland_1010]

The upside of getting incorporated is business pays less tax and if your business has a debt or suffers a loss, its business responsibility and not your responsibility. But the hassle of getting incorporated is that the money you earn is not yours to take so if you want to get some money from the business then it would be either taken as wages or dividends and at the end of the year, business will issue like a T4A or T5 slip to you and to CRA. Another thing is that business will have to do bookkeeping. You cannot use your business to buy personal stuff and you will need to keep all your receipts.

For sole proprietor, the business will be under your personal name, all money you earn is yours to take and use but the money you earn will be claimed under your personal taxes and you might have to pay lot of taxes in this aspect. Also if your business suffers a loss, it would your responsibility unlike incorporated business.

 

[RBCAN]

Thank you all for your responses.

 

[APPNOV2014NY]

Excellent inputs.

Can someone please comment on below:
https://www.experis-veritaaq.ca/insights/clarifying-your-status-self-employed-consultant-how-ensure-cra-does-not-consider-you-person

It appears that due to CRA crackdown it would make more sense for IT consultants to stick with sole proprietorship instead of incorporation.

 

[NetMecca]

Excellent inputs.

Can someone please comment on below:
https://www.experis-veritaaq.ca/insights/clarifying-your-status-self-employed-consultant-how-ensure-cra-does-not-consider-you-person

It appears that due to CRA crackdown it would make more sense for IT consultants to stick with sole proprietorship instead of incorporation.

This has to do with employers that instead of hiring people as employees just hire them as contractors. The contractor still works for the employer full time, but do not get all the usual employee benefits. Notably there are also some potential tax benefits on both sides. If you have only one client there is a risk that you could have issues with this.

Best way to prevent this from being an issue is to have more than one client. Also register for HST / GST. The article provides several other ways to prove that this is not an employee - employer relationship just structures as a sub contractor for tax and other reasons.

The point is you either have your own business with everything that that entails or you are just an employee with an employment structure that looks like a subcontractor structure.

Hope this helps.

 

[anujoshi]

Consult an accountant on the tax implications of incorporating and running your business that way. Personally, I paid about $450 several years ago to incorporate within Ontario (you can do it online for a fee without paying anyone else additional). There is also a way to incorporate across the country... but if you're a resident of Ontario and getting paid in Ontario then I don't think it matters. Best to consult an accountant or a rep at Revenue Canada regarding HST number.