Canada's economy

[Molly]

Buddy.... that post leaves me a little lost for words. There just aren't enough of them to fill the chasm.

Let's just say: the one with the oddball understanding of the meaning of self-employment (and 'business') is you. Without intention of being unkind ..... that's is a deeply lunchbucket perspective, so incorrect in nuance as to be incorrect in the whole.

Businesses rarely leap from nothingness to wholeness in a single bound. Many (on all levels of 'becoming established') are formed or continue to exist solely to service a single client. The only serious difference between the kid who mows lawns and the sole owner of Largecorp is scale. There is no separation at all between being in business and self-employment.

The most signifigant parameter of difference between emplyment and self-employment is the description of what the buyer (employer/client) is purchasing, and the level of freedom the employee/contractor has in providing that good or service. Are they renting you, personally, or are they giving you money to see that something specific is, by hook or crook, provided? Rent-boys are employees; providers of goods and services may or may not be. The line between is wide and grey, not narrow and black.

[Riverwind]

I challenge anyway to provide the documention that was on Revenue Canada's website between 2001 - 2003 with regards to self employment.

I think the onus is on you to demonstrate that the rules actually have changed since 2001 - especially when you are making claims that the rules were completely irrational. Given the link I already have provided I think most people will agree that the rules were likely similar unless you can demonstrate otherwise.

Sorry buddy if you spend 40 hours a week at one company you are an employee of that company and that company is liable for EI payments and WSIB contributions on the money paid.

Spending 40 per week at a single company's jobsite is something that would make it harder to establish that you are self employeed. However, it is not impossible. For example, if you paid by the project instead of by the hour then you would be considered self employeed.

Oh yeah? Than what's Ignatief's EI reform all about?

I don't have a clue. The entire topic makes no sense to me.

Legitimate business contributes to the country in registring and remitting the cost of doing business whereas the self employed typically work out of their house and use their own phone.

Incorporating as a business costs around $400. After that you have some additional book keeping to do but there are no other requirements that exceed the requirements for self employed. People who run their own businesses do not pay EI even if they are technically employeed by the company. Most other regulations that cover a self employeed also apply to the principals in a corporation.

They are not Entreprenuers but going after the scraps established businesses can't be bothered with or your client is to cheap to pay for.

A willing seller finding a willing buyer that agrees on the price is the definition of enterprenuer.

[whowhere]

Buddy.... that post leaves me a little lost for words. There just aren't enough of them to fill the chasm.

Let's just say: the one with the oddball understanding of the meaning of self-employment (and 'business') is you. Without intention of being unkind ..... that's is a deeply lunchbucket perspective, so incorrect in nuance as to be incorrect in the whole.

Businesses rarely leap from nothingness to wholeness in a single bound. Many (on all levels of 'becoming established') are formed or continue to exist solely to service a single client. The only serious difference between the kid who mows lawns and the sole owner of Largecorp is scale. There is no separation at all between being in business and self-employment.

The most signifigant parameter of difference between emplyment and self-employment is the description of what the buyer (employer/client) is purchasing, and the level of freedom the employee/contractor has in providing that good or service. Are they renting you, personally, or are they giving you money to see that something specific is, by hook or crook, provided? Rent-boys are employees; providers of goods and services may or may not be. The line between is wide and grey, not narrow and black.

All semantics and a play on words. The self employed are not businesses. You want to call yourself a business, get a business license, rent space that is considered commercial or industrial (your house doesn't count) and list your business in the yellow pages.

Not there? showing up at someone else's business then getting a cheque from that business, you are not a business but a tax evader and Revenue Canada has to hold you and that company for evading taxes.

The world is black and white, you either are a business or you are not. For to long under the conservative watch has Canada slipped down the slope of Corrupt governance.

[Riverwind]

All semantics and a play on words. The self employed are not businesses. You want to call yourself a business, get a business license, rent space that is considered commercial or industrial (your house doesn't count) and list your business in the yellow pages.

Businesses are any incorporated company. That's it. It does not make a difference whether it is run out of home nor is there any requirement to get a business license.

Not there? showing up at someone else's business then getting a cheque from that business, you are not a business but a tax evader and Revenue Canada has to hold you and that company for evading taxes.

Why do you persist in your denial long after you have been given evidence that shows that your are wrong?

The world is black and white, you either are a business or you are not.

If you incorporate you are a business. Many self employed will eventually incorporate but it is not worth the additional book keeping hassle unless one is certain that one can earn a regular income from self employement.

[whowhere]

I think the onus is on you to demonstrate that the rules actually have changed since 2001 - especially when you are making claims that the rules were completely irrational. Given the link I already have provided I think most people will agree that the rules were likely similar unless you can demonstrate otherwise.

Why should the onus be on me for what the corrupt conservatives have done with Revenue Canada and their definitions for self employment.

Spending 40 per week at a single company's jobsite is something that would make it harder to establish that you are self employeed. However, it is not impossible. For example, if you paid by the project instead of by the hour then you would be considered self employeed.

This would depend on the context of the work being done and for how long. Common senses judgement would have to used to assess the situation.

Incorporating as a business costs around $400. After that you have some additional book keeping to do but there are no other requirements that exceed the requirements for self employed. People who run their own businesses do not pay EI even if they are technically employeed by the company. Most other regulations that cover a self employeed also apply to the principals in a corporation.

A willing seller finding a willing buyer that agrees on the price is the definition of enterprenuer.

Corporations are not legally allowed to do anything they have to hire out for things to get done. When the hiring takes place, EI, CPP, WSIB all has to be paid. When you are a corporation you have to retain a lawyer to act for you in all matters and the rules for accounting can be expensive and a burden.

You cannot compare a corporation to a "self employed" who works out of his garage and communicates via his cell phone.

The two, can't be compared.

[Riverwind]

Why should the onus be on me for what the corrupt conservatives have done with Revenue Canada and their definitions for self employment.

No one has changed the rules since the Liberals were booted out in 2006.

This would depend on the context of the work being done and for how long. Common senses judgement would have to used to assess the situation.

So now you are changing your tune. So you agree that common sense based on the published guidelines is what is require and that there is no requirement for 5 revenue sources?

Corporations are not legally allowed to do anything they have to hire out for things to get done. When the hiring takes place, EI, CPP, WSIB all has to be paid.

Only if the corporation hires employees that are not major shareholders or officers of the company. Owners of companies are exempt from EI and workers comp is limited. Everyone pays CPP if they work.

When you are a corporation you have to retain a lawyer to act for you in all matters and the rules for accounting can be expensive and a burden.

Legal self-counsel books are sufficient for a business with one shareholder. Most of a legal stuff for corporation is related to ensuring that shareholder's rights are protected - a non issue if there is only one shareholder. Accounting costs more which is why I said that most people will not bother unless they know they will earn a consistent income from the business.

You cannot compare a corporation to a "self employed" who works out of his garage and communicates via his cell phone.

Many corporations operate out of a house and only have a cell phone as a contact number.

[msj]

Got to agree with Riverwind again.

WSIB (in BC this is WCB - for workers compensation benefits) is optional for partners or proprietors but not optional if a person is self-employed through an incorporated company (even if the shareholder only takes dividends out rather than wages then he/she will still be on the hook to pay something to WCB).

Once again - if you don't pay into it then you also don't get to benefit from it. BFD.

As for any rule changes - there haven't been any significant ones in years (with respect to contractor vs employee).

Sure, there is the ballet company ruling which must have been about 3 years ago or so, but that only solidified the status quo (i.e. that the artists working in the ballet were not employees but independent contractors) and that is at the judiciary level rather than the legislative level.

But then I suppose the CPC is responsible for putting those judges in the court too?

Edited August 9, 2009 by msj

[whowhere]

No one has changed the rules since the Liberals were booted out in 2006.

So now you are changing your tune. So you agree that common sense based on the published guidelines is what is require and that there is no requirement for 5 revenue sources?

No, what it means you need to finish one project and move onto the next. If I advertised myself as a house painter, how long would it take me to paint someones house? To be successfull I would need more than 5 "revenue" sources/customers. When I say common sense if this house painter happen to someone get a contract to paint 100 bedroom mansion this may take awhile.

Only if the corporation hires employees that are not major shareholders or officers of the company. Owners of companies are exempt from EI and workers comp is limited. Everyone pays CPP if they work.

Really? Labour laws stipulate a minimum wage to be paid out for work. At minimum any work being done has to be done at minimum wage and you/your corporation is on the hook for those remissions.

Legal self-counsel books are sufficient for a business with one shareholder. Most of a legal stuff for corporation is related to ensuring that shareholder's rights are protected - a non issue if there is only one shareholder. Accounting costs more which is why I said that most people will not bother unless they know they will earn a consistent income from the business.

I suggest you look over the ontario court of justice act. A corporation has to have a lawyer represent the corporation in all proceeding. As for accounting you have to file accounting statements acceptable to accounting practices. Being a corporation is expensive or could be expensive.

Many corporations operate out of a house and only have a cell phone as a contact number.

Yeah, only the losers.

[whowhere]

But then I suppose the CPC is responsible for putting those judges in the court too?

Actually yes, the Liberals or the conservatives. Unlike the United States Judges in Canada don't get elected they are often appointed by the political party in power.

[msj]

No, what it means you need to finish one project and move onto the next. If I advertised myself as a house painter, how long would it take me to paint someones house? To be successfull I would need more than 5 "revenue" sources/customers. When I say common sense if this house painter happen to someone get a contract to paint 100 bedroom mansion this may take awhile.

Show us the link to 5 revenue sources and maybe we will give you some merit. Otherwise its just more BS.

Really? Labour laws stipulate a minimum wage to be paid out for work. At minimum any work being done has to be done at minimum wage and you/your corporation is on the hook for those remissions.

And labour laws are enforced on a complaint basis.

Do you really think that the shareholder of a company is going to phone into labour standards and complain about not getting paid minimum wage?

You do realize that the shareholder and the employee are one and the same, right?

I suggest you look over the ontario court of justice act. A corporation has to have a lawyer represent the corporation in all proceeding. As for accounting you have to file accounting statements acceptable to accounting practices. Being a corporation is expensive or could be expensive.

Somehow I doubt it.

In BC one can incorporate a company and maintain the minutes and other records themselves. I'm sure someone with knowledge in Ontario can speak to the same.

As for accounting statements - if we are talking about a private company with few, or one, shareholders then you don't need an accountant either - if you know what you're doing.

Sure, accrual accounting to get all your prepaids, payables and receivables recorded properly is good, but one does not need to account for future income taxes or other such GAAP measures.

Take a look at schedule 141 [PDF] of a corporate tax return.

Pay particular attention to Part 4.

One can prepare financial statements using an old version of Simply Accounting, throw them onto the T2 return (GIFI) and file the return as long as they know a few things (or where to look things up).

Of course, most people do hire accountants to make sure they are getting it right which is why Riverwind mentioned that incorporated self-employed persons have to consider the extra costs (or extra work if they want to do it themselves) when incorporating.

Yeah, only the losers.

Those who operate as a corporation out of their house are usually the ones making good money while saving on expenses.

It has more to do with what they do - if they don't need a store front or office to meet people then why incur the costs?

These people are usually in the service sector and often include everyone from lawyers to accountants to engineers to general contractors and even painters.

[whowhere]

These people are usually in the service sector and often include everyone from lawyers to accountants to engineers to general contractors and even painters.

At least you are talking about people who are providing something. The so called self employed out there are nothing more than glorified employees who are cheating the tax man. As for businessess who cheat costs I am sure the competition who is not would have something to say about their competitor having an unfair advantage over their legitimate operating businesses. It's up to the governments to ensure all companies are complying with the laws.

The point of a corporation is to seperate personal assets from corporate assets. If the corporation is being operated out of a persons house it defeats the purpose of a corporation. If something goes wrong you will lose your house. Not only are people who operate corporations from their house losers, they are also stupid.

[msj]

Wow, you really don't know anything about business do you?

When it comes to liability it doesn't really matter where one operates.

If a client trips at your home or at your office - well, the insurance coverage is their to protect against that.

If you perform incompetently then hopefully you have business liability insurance or professional liability insurance coverage to protect you.

Either way, where one operates is irrelevant.

If a loan is involved - well, the banks ask for personal guarantees and personal assets as security for small/medium sized businesses anyway.

Once again - where one operates isn't really relevant.

The only evidence of stupidity and loserdom here is embedded in almost every sentence you write.

[whowhere]

Wow, you really don't know anything about business do you?

When it comes to liability it doesn't really matter where one operates.

If a client trips at your home or at your office - well, the insurance coverage is their to protect against that.

If you perform incompetently then hopefully you have business liability insurance or professional liability insurance coverage to protect you.

Either way, where one operates is irrelevant.

If a loan is involved - well, the banks ask for personal guarantees and personal assets as security for small/medium sized businesses anyway.

Once again - where one operates isn't really relevant.

The only evidence of stupidity and loserdom here is embedded in almost every sentence you write.

very weak response. Somehow you put an unemployed, ehem I mean self-employed on the same foot as a corporation such as microsoft or General Electric.

All I can say get out of the house and get a job at a real corporation.

[msj]

very weak response. Somehow you put an unemployed, ehem I mean self-employed on the same foot as a corporation such as microsoft or General Electric.

All I can say get out of the house and get a job at a real corporation.

So if you're incorporated you have to be a big company?

There are thousands of small/medium businesses that have millions of Canadians working for them as employees.

I suppose all those employees must be losers since they don't work for Royal Bank or Rim?

[Molly]

LOL This is a fascinating (and hilarious) peek into differing cultural perspectives!

Whowhere describes anyone self-employed as a loser-- and my own homeys would save their disdain for folks who offer their time and effort (and their soul) to someone smarter than they are to organize profitably. A lunchbucket and regular paycheck is a very low aspiration... a choice to be a lifetime dependent!

What one admires, the other pities.

[whowhere]

So if you're incorporated you have to be a big company?

There are thousands of small/medium businesses that have millions of Canadians working for them as employees.

I suppose all those employees must be losers since they don't work for Royal Bank or Rim?

Yeah but they have office space and aren't running their corporation out of their house. As I said the point of a corporation is to separate personal assets from business assets. If you run your corporation from your house, you will lose it, hence, loooooooooooser.

[Shady]

Small and medium size businesses create most of the jobs in our economy. Anyone who has contempt for small and medium size businesses, and especially self-employed business people, is highly ignorant. Running a business is a very difficult job. And every business, no matter how large, in the beginning was a small business, many of which started by someone who was then self-employed. You don't just create a large corporation out of thin air, or in a matter of a few days.

Bill Gates started Microsoft in his garage. If this idiot poster was around back then, he woulda been screaming at Gates to "get a real job."

[whowhere]

LOL This is a fascinating (and hilarious) peek into differing cultural perspectives!

Whowhere describes anyone self-employed as a loser-- and my own homeys would save their disdain for folks who offer their time and effort (and their soul) to someone smarter than they are to organize profitably. A lunchbucket and regular paycheck is a very low aspiration... a choice to be a lifetime dependent!

What one admires, the other pities.

No, what I am saying is many who claim to be self employed are nothing more than tax cheats who are not really self employed. These so called self employed have one source of Revenue from one company. They operate this way to evade paying taxes. With the soft economy alot of these tax cheats must be the ones crying to ignatief on how they can't collect what they purposely avoided to pay into.

There are laws are in place to fix these cheats but the Conservatives look the other way.

[whowhere]

Small and medium size businesses create most of the jobs in our economy. Anyone who has contempt for small and medium size businesses, and especially self-employed business people, is highly ignorant. Running a business is a very difficult job. And every business, no matter how large, in the beginning was a small business, many of which started by someone who was then self-employed. You don't just create a large corporation out of thin air, or in a matter of a few days.

Bill Gates started Microsoft in his garage. If this idiot poster was around back then, he woulda been screaming at Gates to "get a real job."

You know buddy leave it to donkeys to take things out of context. Somehow the self employed are on the same footing as a corporation such as microsoft? You want to be a business, register as a business, pay your way as a business. That is not what the self employed are, they are tax evaders often working for one company.

Revenue Canada should be investigating these crooked self employed and the crooked companies evading payroll taxes by paying these so called self employed this way.

Anyone who is ignorant of business is you. Because this is not a business forum but a political forum, this forum is interested in ensuring Canada gets it's due. Kind of hard when you have people abusing the system and the corrupt conservatives allowing this to go on.

[Bonam]

You know buddy leave it to donkeys to take things out of context. Somehow the self employed are on the same footing as a corporation such as microsoft? You want to be a business, register as a business, pay your way as a business. That is not what the self employed are, they are tax evaders often working for one company.

Umm that's precisely what the self-employed do; they register as a business, and pay taxes as a business. What evasion are you talking about?

Revenue Canada should be investigating these crooked self employed and the crooked companies evading payroll taxes by paying these so called self employed this way.

Revenue Canada already keeps track of and regularly audits all businesses, including those consisting of just one person.

Anyone who is ignorant of business is you. Because this is not a business forum but a political forum, this forum is interested in ensuring Canada gets it's due. Kind of hard when you have people abusing the system and the corrupt conservatives allowing this to go on.

"Canada get's its due"? What are you, a totalitarian of some sort? The conservatives (as did the liberals before them) rightly promote small business, as it is a major driver or employment, innovation, and economic growth.

[msj]

Yeah but they have office space and aren't running their corporation out of their house. As I said the point of a corporation is to separate personal assets from business assets. If you run your corporation from your house, you will lose it, hence, loooooooooooser.

The point of running a small CCPC (Canadian Controlled Private Corporation) is to pay less tax (in BC - 13.5% tax rate up to $400,000 whereas personal tax rates are 20% and stop at 43.7% at around $126,000+ in income).

One can easily run a business through a corporation from their home without risking losing their house.

How?

Easy - don't get secured financing (eg. do not use your home as security to finance that loan from the bank), live within your means so as to always pay your taxes, and carry adequate business insurance.

I will note that one does not have to be incorporated to run a business from their house and still benefit from claiming a portion of their house as a business expense while not having to fear losing their house as long as they follow the above rules. Proprietors and partners can do this but they have to pay the high tax rates.

Which is why incorporated businesses (particularly those that have been around for a while) tend to be the successful ones - these are the people using the corporate structure to defer taxes and who can afford the accountants to do their books and offer their advice.

I will also note that a person who runs their corporation from an office can lose their house just as easily as one who works from home if this person doesn't follow the easy to follow rules above.

And I will also note that an employee who uses his/her home as security for a loan (say to invest in the stock market) and fails to get adequate insurance for that home and then has a big drunk party where a guest drives off and kills a pregnant woman and her 3 year old child is at far larger risk of losing their home than the prudent self-employed person.

[msj]

You know buddy leave it to donkeys to take things out of context. Somehow the self employed are on the same footing as a corporation such as microsoft? You want to be a business, register as a business, pay your way as a business. That is not what the self employed are, they are tax evaders often working for one company.

Revenue Canada should be investigating these crooked self employed and the crooked companies evading payroll taxes by paying these so called self employed this way.

What you are talking about are situations where a person works for one, and only one, company (Encana comes to mind) as a subcontractor (either incorporated or as proprietor) when they are, in fact, an employee (per RC4110 as linked back on page 3).

Yes, the payor company saves paying its share of EI and CPP.

The subcontractor saves by not paying anything into EI but has to pay both sides of the CPP and pays income tax just like anyone else. The sub isn't eligible to receive EI benefits since he/she doesn't pay into it.

Oh, yeah, there is some time value of money considerations to consider since the government isn't getting their payroll deductions every week or every month from the payor corporation.

BFD.

Sure, there are incidences of "personal services businesses" going on and there are rules about it (for which I'm not going to waste time going into detail with an obvious moron).

To say that most self-employed people fit into this situation without any statistics to back it up really is ignorant, though.

[whowhere]

What you are talking about are situations where a person works for one, and only one, company (Encana comes to mind) as a subcontractor (either incorporated or as proprietor) when they are, in fact, an employee (per RC4110 as linked back on page 3).

Yes, the payor company saves paying its share of EI and CPP.

The subcontractor saves by not paying anything into EI but has to pay both sides of the CPP and pays income tax just like anyone else. The sub isn't eligible to receive EI benefits since he/she doesn't pay into it.

Oh, yeah, there is some time value of money considerations to consider since the government isn't getting their payroll deductions every week or every month from the payor corporation.

This is what I am talking about. Those who abuse the business structure to avoid taxes now they are crying to ignatief when they are out of a job. A registered small/sole propreitor is not the same as someone who is self-employed. A Self-employed person could be a landscaper, a painter, a handyman, a snow shoveler, a steam cleaner, etc, etc.... I am sure you are getting the picture!! A small propreitor, is the coffee shop, the hot dog cart, sub shop, bulk spices, etc. These propreitors have business locations whereas the "self-employed" will work out of their home.

Where I am saying the self employed is abusing the system is when mr big landscaping company hires self employed buddy landscaper and self employed landscaper's only income is from Mr Big landscaping company. When this happens its up to Revenue Canada to identify this and go after Mr Big Landscaping company for not paying the payroll taxes and not ensureing WSIB is provided.

Once upon a time Revenue Canada made it clear to be deemed self employed you had to have five different Revenue streams. That means 5 different Mr Big Landscaping jobs over a course of year. Rules are Rules.

I am quite clear in what I am saying so my conclusion is you people are likely to the abusers and offenders that deserve an audit by Revenue Canada into your business practices and tax cheating.

[msj]

This is what I am talking about. Those who abuse the business structure to avoid taxes now they are crying to ignatief when they are out of a job. A registered small/sole propreitor is not the same as someone who is self-employed. A Self-employed person could be a landscaper, a painter, a handyman, a snow shoveler, a steam cleaner, etc, etc.... I am sure you are getting the picture!! A small propreitor, is the coffee shop, the hot dog cart, sub shop, bulk spices, etc. These propreitors have business locations whereas the "self-employed" will work out of their home.

A sole proprietor is anyone who fills out form T2125 on his/her personal tax return and does not have any partners to split the income with.

A self-employed person is a person who works for him/herself and provides goods/services to customers/clients.

Where I am saying the self employed is abusing the system is when mr big landscaping company hires self employed buddy landscaper and self employed landscaper's only income is from Mr Big landscaping company. When this happens its up to Revenue Canada to identify this and go after Mr Big Landscaping company for not paying the payroll taxes and not ensureing WSIB is provided.

Yeah, it happens. And, once again, BFD.

Mr. Big Landscaping would pay WSIB on his subcontractors (or get nailed in an audit).

Little subcontractor would still pay income tax and CPP (times 2) and miss out on claiming EI benefits.

This is small potatoes compared to real tax evasion. Hell, going after servers in restaurants (their tips) would probably be a more worthwhile use of CRA's time and resources.

Oh right, those are employees.

Once upon a time Revenue Canada made it clear to be deemed self employed you had to have five different Revenue streams. That means 5 different Mr Big Landscaping jobs over a course of year. Rules are Rules.

I am quite clear in what I am saying so my conclusion is you people are likely to the abusers and offenders that deserve an audit by Revenue Canada into your business practices and tax cheating.

Where is the link for this 5 revenue streams and why haven't you provided it?

Edited August 11, 2009 by msj

[August1991]

Lot's of people over the years have collected EI while going to school yet the program still had a 50 Billion dollar surplus the conservatives stole out of it.

The Liberals took the money from EI contributions but I don't agree with the BQ claim that the money was "stolen".

Our current EI system is a bizarre transfer scheme and EI contributions are a regressive tax. When Duceppe claims that the feds took the EI surplus, it is pure populism and a short-sighted criticsm of governments. Governments take from A and give to B.

Of course, I have (so far - knock on wood) paid more into car insurance, house insurance, life insurance, and disability insurance and I don't complain.

Why?

Because if I'm dumb enough to think that I would be better off to "get it back" then I would be dead or my house would be a burned out hole.

msj, your reasoning is correct when applied to (private) car, house or life insurance. Your logic doesn't work in the case of (public) EI. EI is not insurance, it's a transfer scheme and so the trick is to game the system: where possible, avoid contributions and receive the transfer.

Ordinary Canadians are smart people and they have done exactly that.