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Member
May 2, 2010
246 posts
61 upvotes
I would take the contractor route (assuming little need for health coverage, that could be a major factor if unhealthy) and get working on finding income from a second company. I have lots of expenses in my work so contracting has many advantages. Good luck.
Deal Addict
Dec 12, 2009
3473 posts
1317 upvotes
Toronto
don242 wrote:
Feb 1st, 2016 9:02 pm
Of course you would include HST on your billing invoice.
Something to consider when setting up the contract. Is that HST included in the $100K or on top of it?

I say take the $90K job, unless that corporation can earn more money on the side. I.e. is that an exclusive 1 year contract? Consider where you will be in a year if you take the contract. Possibly looking for work again.
Member
Dec 13, 2006
458 posts
167 upvotes
I would take the 90K position easily in that case..
You can easily calculate the extra avantage:
Ex: 3 Weeks vacation = 6% of 90K -> 5400$
10 Sick Day = 4% of 90K -> 3600$
13 Holiday -> 4000$
Health / Dental/ short/long term disability? Does the employer pay everything for you of familly? (Between 3000$ and 5000$)
Pension, RRSP matching? lets keep a simple 5% rrsp matching -> 4500$
Accountant for 1 year -> 1500$
CPP -> 2500$
+ Job security = ??
So in my opinion to be equivalent to the 90K offer, contract need to be of (90000+5400(vacation)+3600(sickday)+4000(holiday)+ 4000 (health)+4500(pension)+1500 (accountant) + 2500 (cpp)+ 10000$ extra risk) = 125000$
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Oct 15, 2006
4263 posts
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grisensko wrote:
Feb 10th, 2016 9:16 am
I would take the 90K position easily in that case..
You can easily calculate the extra avantage:
Ex: 3 Weeks vacation = 6% of 90K -> 5400$
10 Sick Day = 4% of 90K -> 3600$
13 Holiday -> 4000$
Health / Dental/ short/long term disability? Does the employer pay everything for you of familly? (Between 3000$ and 5000$)
Pension, RRSP matching? lets keep a simple 5% rrsp matching -> 4500$
Accountant for 1 year -> 1500$
CPP -> 2500$
+ Job security = ??
So in my opinion to be equivalent to the 90K offer, contract need to be of (90000+5400(vacation)+3600(sickday)+4000(holiday)+ 4000 (health)+4500(pension)+1500 (accountant) + 2500 (cpp)+ 10000$ extra risk) = 125000$
yes. Rule of thumb is go contract if offered more than 30% above salary
Sr. Member
Feb 25, 2005
567 posts
20 upvotes
How hard or complicated is it to do your own incorporated or Sole Proprietor income tax if you are just a 1 person contractor. I am thinking about doing contract work in Finance but I would get paid as a contractor. The choices is to be on company payroll as a contractor or get paid $8K a year on average more if I am incorporated or Sole Proprietor? A recruiter told me these are the 3 options and there's no benefits. Which ones do you think is best? For example, $70K as contractor on company payroll or $78K as Sole Proprietor or Incorporated contract employee and you will bill the company directly instead. Company will pay for HST for everything you bill them when you are incorporated or Sole Proprietor.

Can you write off a lot of things to save on taxes when you are a contractor as incorporated or sole proprietor?
Deal Fanatic
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Nov 19, 2004
8587 posts
1623 upvotes
Cambridge, ON
h2lam wrote:
Jul 6th, 2016 1:25 pm
How hard or complicated is it to do your own incorporated or Sole Proprietor income tax if you are just a 1 person contractor. I am thinking about doing contract work in Finance but I would get paid as a contractor. The choices is to be on company payroll as a contractor or get paid $8K a year on average more if I am incorporated or Sole Proprietor? A recruiter told me these are the 3 options and there's no benefits. Which ones do you think is best? For example, $70K as contractor on company payroll or $78K as Sole Proprietor or Incorporated contract employee and you will bill the company directly instead. Company will pay for HST for everything you bill them when you are incorporated or Sole Proprietor.

Can you write off a lot of things to save on taxes when you are a contractor as incorporated or sole proprietor?
For $8K it probably isn't worth it. If you are a sole proprietor you have to pay both sides of the CPP. You may get to write off a few expenses but likely not as much as you think. You also get no EI as a sole proprietor if that matters to you.

Income taxes are not that difficult, but they do take extra knowledge and many use an accountant instead. If you are incorporated, then I would say an accountant is necessary. You will also need to file GST/HST returns and make sure you pay those on time.

If you do go the sole proprietor route, I would get a ruling from the CRA as to your status as it sounds like you would still legally be considered an employee.
Sr. Member
Feb 25, 2005
567 posts
20 upvotes
don242 wrote:
Jul 6th, 2016 2:06 pm
For $8K it probably isn't worth it. If you are a sole proprietor you have to pay both sides of the CPP. You may get to write off a few expenses but likely not as much as you think. You also get no EI as a sole proprietor if that matters to you.

Income taxes are not that difficult, but they do take extra knowledge and many use an accountant instead. If you are incorporated, then I would say an accountant is necessary. You will also need to file GST/HST returns and make sure you pay those on time.

If you do go the sole proprietor route, I would get a ruling from the CRA as to your status as it sounds like you would still legally be considered an employee.
Thanks so much Don242 for clarifying this. I really appreciate it. I always though that if I was a contractor doing contract as sole proprieter or incorporated, there's great big benefits where I can write off stuff to save on taxes like gas, car lease, meals etc...I didn't know that you don't really save much. You can still pay into EI as self employed and get EI when you are done your contract right?
Deal Fanatic
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Nov 19, 2004
8587 posts
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Cambridge, ON
h2lam wrote:
Jul 6th, 2016 2:11 pm
Thanks so much Don242 for clarifying this. I really appreciate it. I always though that if I was a contractor doing contract as sole proprieter or incorporated, there's great big benefits where I can write off stuff to save on taxes like gas, car lease, meals etc...I didn't know that you don't really save much. You can still pay into EI as self employed and get EI when you are done your contract right?
The EI for self employed is just for paternity benefits. You don't qualify for EI if you lose the job when you are self employed.

There are some expenses you can claim and it really depends on the situation. Car related expenses can add up but it depends on what you are doing. If your office is at the company you are working for, then you cannot claim and car related expenses for travelling back and forth to work. If you were to go out to see a client on the other hand, you would be able to claim that percentage. If you are working from home, then there isn't any car expenses generally unless again you are visiting clients.

Meals can't really be written off unless you are traveling. Just going to work and buying lunch doesn't make your mean a write-off. Home expenses only qualify if you have a home office where you spend most of the time.

That said, it could be beneficial in your case but really depends on the situation. Other things to consider are vacation time/pay (which you don't get as self employed, not paid time anyway), any medical benefits. The general consensus would be that 8K is not enough of a difference. The up side is that if you are self employed, you set your own hours and don't need to ask your boss for taking an afternoon off or the like.
Sr. Member
Feb 25, 2005
567 posts
20 upvotes
A friend of mine got asked by CRA to submit is receipt for public transit and tuition claims. Do you think CRA is very thorough and will call the company to verify whatever we submit to them? Or do they just look at it briefly and move on since there is so many people that they have to audit? Anyone have experience with this?
Deal Fanatic
User avatar
Mar 23, 2008
9749 posts
6137 upvotes
Edmonton
h2lam wrote:
Jul 6th, 2016 2:44 pm
A friend of mine got asked by CRA to submit is receipt for public transit and tuition claims. Do you think CRA is very thorough and will call the company to verify whatever we submit to them? Or do they just look at it briefly and move on since there is so many people that they have to audit? Anyone have experience with this?
Your post has no relationship to being contract or salaried employees. Why not start your own relevant thread?

C
Deal Addict
Jan 28, 2009
1889 posts
386 upvotes
Calgary
I always expect a 40% bump in pay when I go on as a contractor versus an employee.
Deal Addict
Apr 25, 2004
1147 posts
111 upvotes
Another angle is which company gives you the best opportunity to get a better NEXT job.

If you look at comp only, go for the FT.
Deal Addict
Feb 25, 2007
1183 posts
613 upvotes
Ottawa
As people have said, a 10% (well 11%) bump for contractor vs FT employee is -- all other things being equal -- not worth it.

Two possible exceptions:
  1. if the contractor status also carries genuinely greater freedom how, when, and where to do the work, and to take on additional contract work from other sources. (Something like this would be needed to pass muster in case you incorporate to not be penalized as a personal services business anyway)
  2. If you don't need the money for living expenses right away, i.e. it's savings for the future. As someone else has said, if you withdraw money from a small business in the year you make it, tax integration means your tax rate will be the same whether its income or dividends. Or, if your deductions are small, if you were paid as an individual, contractor or employee, and your corporation didn't exist. But if you are able to retain earnings in the corporation (and pass the hurdles in the previous point), you can get much lower tax rates by "income splitting with your future self"
Bottom line: $100 vs 90k is nowhere near enough for a difference to *make* you start thinking of going the contractor route. But if it would be an attractive option for other reasons already, it might be a windfall versus the much reduced optimization opportunities as an employee.
Newbie
Feb 18, 2019
2 posts
Hi
I am currently getting 78000. I have offer of 70/hr for 1 year contract possible extention.
What are usually tax deduction amount or % vs full time? Can I show my wife as a part/full time employee when I incorporate.
Is it worth taking this offer considering I am getting max 5% increase in salary including bonus/ year ?
Please if someone can guide.
Thanks
Jeff

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