OT contracting and incorporation

[Evan Leibovitch]

Fraser Campbell wrote:
> I incorporated because it was a requirement to get the contract I was 
> interested in.  For the company hiring you it helps maintain the appearance 
> that you are not an employee (I think that's the perceived benefit anyway).
>   
As I mentioned before, if CCRA sees that your "business" (incorporated
or not) only has one client, and if you do most of your work at the
client site, that may deem you an employee of the client -- even if both
you and the client say you're a contractor. That "appearance" does not
survive well under such scrutiny, _especially_ if it seems the
arrangement was done specifically to subvert a conventional hiring process.

There are many distinctions between being a contractor and being and
employee which go far beyond the scope of this thread -- not just
taxation but also applications of labour laws, requirements to deduct EI
(and possibly workman's comp), etc. My point is that the decision of
which one you are is not _completely_ simply one of mutual agreement
between you and the client. The government can change that status
unilaterally.

> In my understanding, having a corporation does not decrease your liability one 
> iota so there's no benefit from that point of view.
>   
It protects you from creditors to some extent. The business can go
bankrupt without you personally being on the hook to the company's
creditors. Again, governments are immune from this -- if a failed
company owes taxes they will come after the directors personally if the
company's assests aren't enough. In particular, collecting taxes and not
remitting (ie, sales tax or employee deductions) is a real no-no.

- Evan


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