OT contracting and incorporation

[Alex Beamish]

On 9/25/07, Neil Watson <tlug-neil-8agRmHhQ+n2CxnSzwYWP7Q at public.gmane.org> wrote:
> Hi folks,
>
> I have a question to direct to the self employed members of the group.
> Are you incorporated?  As an IT contractor are there reasons to
> incorporate or not to incorporate?

My buddy Steve incorporated some time ago and has done very well
indeed with his PeopleSoft consultancy. His corporation bills the
client, and the corporation then pays Steve a small salary. He works
for different clients, travels on business, and uses part of his home
for business, and a lot of that stuff is paid for by the corporation.

The corporation can also retain earnings and invest them, and Steve
just draws a salary. The way he put it, the worst case is that your
corporation gets paid by the client, then all of the money is paid out
to you as salary, so you're no worse off than if your company were a
sole proprietorship. And as soon as the corporation pays for some of
the things like clothes for you to wear to work on-site, your
haircuts, a portion of your car, the mileage to get to the client,
your lunches, you're ahead -- less the cost to set the corporation up.

And as always, consult your lawyer and accountant. They'll be able to
tel you whether the CCRA rules make that your best choice.

-- 
Alex Beamish
Toronto, Ontario
aka talexb
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