Incorporating self as a contractor
Can someone please tell me if it is worthwhile to incorporate before starting an actual contact and what is required to incorporate in ON?
Many Thanks in advance.
Jul 14th, 2018 8:13 am
Jul 14th, 2018 7:36 pm
Jul 15th, 2018 1:06 am
Jul 16th, 2018 5:53 am
BananaHunter Thanks for replying. I am familiar with incorporating for a business. However I am not sure that most contractors incorporate as a business or sole proprietor.BananaHunter wrote: ↑Jul 15th, 2018 1:06 amSetting up a corporation is incredibly easy. You can do it all online. If you are the only person involved, you don't need a lawyer/accountant to help.
Is it worthwhile? That's harder to answer. If you expect to have a lot of clients, then probably. Yes there will be some extra paperwork but I think it's manageable. In terms of financial costs, there are some new tax rules where you might be deemed a PSB (personal services business) where a lot of expenses are not deductible. Previously the main advantage is that you receive all this income in your corporation and you have some flexibility in how you can withdraw it, plus the ability to deduct certain expenses. The new PSB rules are kind of muddy so I'm not sure what's going on there...but it appears a lot of the previous tax advantages of being a contractor have been destroyed by that godawful tax bill.
Jul 16th, 2018 7:24 am
Jul 16th, 2018 11:56 am
Speaking as someone who has been an IT contractor for the past 5 years...
Jul 17th, 2018 8:50 am
Yes you are right, some head hunters I have spoken to recently have made it clear that they prefer incorporated contractors. Looks like full blown business incorporation is the way to goCNeufeld wrote: ↑Jul 16th, 2018 11:56 amSpeaking as someone who has been an IT contractor for the past 5 years...
As mentioned... Some companies don't like to deal with sole prop contractors.
Unfortunately, the government has removed a number of tax benefits of being incorporated for single employee corporations. So personally, I consider it as overhead as far as being a contractor goes, as opposed to a benefit.
Jul 17th, 2018 10:07 am