Entrepreneurship & Small Business

Small business or Personal Service Business

  • Last Updated:
  • Sep 19th, 2020 9:16 am
[OP]
Member
Mar 2, 2006
444 posts
221 upvotes

Small business or Personal Service Business

I've been looking into incorporating myself lately and becoming an independent contractor, but the potential of CRA declaring my business as a Personal Service Business (PSB) vs Small Business is keeping me from moving foward.

Currently I work as an hourly employee to a consulting company, but there are others doing the same work as me who are incorporated contractors. Their pay is obviously higher as the company doesn't have to bear the expense of them being employees (cpp, ei, benefits, etc.). For me, the benefits and job security are less important to me and I would rather have a higher pay.

The way the company is structured is that the company would bid on contracts to various clients offering contractors go work for their client. These contracts/jobs for the company's client could vary between 1 year to multiple years working full time hours.

I've done a bunch of reading online and i understand that there are 4 "tests" that the CRA has to determine if you're a PSB:

1. The degree of control exercised by the hirer over the duties the contractor performs.
2. the degree to which the work the contractor provides is integrated with the hirer’s business.
3. Whether or not the hirer provides the tools to be used to perform the services.
4. Whether the contractor has a chance of profit, as well as the risk of loss.

Does doing work through essentially a headhunting company structure preclude you from being declared as a PSB because:
1. Company you work for has no control over the work you're doing for the client
2. the work that's being provided is not integrated into the hirer's business
3. Company doesn't provide you any tools to work for the client
4. Contractor has a risk of loss cause company can terminate contract at any time

If my statement isn't true, how is that all these people working for my company have not been declared as a PSB. I've talked to multiple people in my company and they just shrug it off.

I'm brand new to this whole self-employeed thing, so sorry if these are really basic questions. Also any suggestions for companies that can help me get started? I've gotten some contacts for accountants, but if anyone has some good resources that can help me get started it would be great cause I have no idea how to handle filling for a business, pay roll, dividend, structuring company, etc.

Thanks!
2 replies
[OP]
Member
Mar 2, 2006
444 posts
221 upvotes
Old thread I'm reviving since I'm looking in to incorporating again and wondering if any could help me out. Don't want to get caught being defined as a PSB.
Sr. Member
Feb 23, 2005
905 posts
37 upvotes
sci05 wrote: Old thread I'm reviving since I'm looking in to incorporating again and wondering if any could help me out. Don't want to get caught being defined as a PSB.

See PM

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