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Old 11-15-2012, 03:16 AM   #14
Your Nightmare
KIRASIR's Avatar
Join Date: Dec 2001
Location: TO
Posts: 1,753
Originally Posted by damameke View Post
$800 is all in , including gov's fee($360) name search etc etc..

I dont start till Dec 3, so I have 2 weeks to think about this.. I dont do "gray" area deductions, only allowable deductions to minimise taxes, I dont intend to play with CRA.

Thanks for all the replies
Let me add my 2 cents, If you are an IT Consultant (external, contractor, etc.), chances are that you will NOT be "hired" directly by the company itself, but you will be sub-contracted though an agency. Most of the agencies today require the contractors to be incorporated in order to remove any potential liabilities with regards to the employee/non-employee taxation issues.

If your company doesn't use an agency then they will definitely force you to incorporate in order to prevent you from claiming in the future that you are their employee, and hence should have been receiving insurance, benefits, CPP contributions, etc.

Basically if you are a sole proprietor and on a contract by a company from which you get a regular paycheck for the services rendered as well as work on-site using their equipment (99% of the IT contractors today), in the eyes of the CRA you will be considered an employee and the company should been making certain contributions to CRA on your behalf. Additionally, if your personal taxes were audited, you could be asked to pay taxes with penalties going back up to 7 years for all the years you claimed to be a sole proprietor receiving regular cheques from only one company/client.

From this possibility alone, given the field where you are, I would recommend you to incorporate. The paperwork is more, the taxes are a bit more painful to calculate as they would have to be done twice but in the end you would be a "real business on paper". Then the only issues would be the allowed business deductions and expenses, and that IS a gray area but as they say: "No risk - no gain"
BTW technically you CAN have a guard dog to protect your business...

Now if you do decide to incorporate, do it yourself. It takes literally an hour and costs around 380 bucks vs paying $800. The extra $400 is usually charged by the "agents" for the services rendered.

Good luck with your new job.

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