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Self employment is a term used to describe those individuals who are in business for themselves. Most often, self employed people earn a living by following their own business, profession or trade. These individuals are often referred to as an independent contractor, consultant or entrepreneur.
Unlike an employer/employee contract of service, the independent contractor enters into a contract for services. In most cases, the contract is for a determined period of time, and the duties of the independent contractor are limited in nature.
CONSIDERATIONS
· An Independent Contractor has the freedom of a self employed individual, and can choose when to work, and for whom. While the contractor is free to contract with other entities during the course of their contract, we need assurances that our contractors will fulfill their engagements with our client firms.
· Independent contractors provide specialized services on a short term basis. As such, these individuals are often paid at a higher rate than the company’s regular full time employees.
· There are no salary tax deductions. This means the self employed individual can hold on to money longer without having to turn it over to Revenue Canada. This may result in improved cash flow.
· A self employed independent contractor is entitled to business related tax deductions. All deductions must be viewed as reasonable in amount and must be an expense ordinarily incurred by the specific business being carried on. Common tax deductions include: office rent, travel, entertainment and meal expenses, marketing and promotional expenses and, equipment and insurance costs. In comparison, an employee's work-related deductions are severely limited.
· When working as a self employed independent contractor, the company is not required to make the employer's contributions to CPP and EI, nor deduct income tax at source. It is unlikely that the company will provide group benefits and statutory entitlements such as vacation pay, overtime pay and notice/severance pay.
· The independent contractor will not qualify for benefits and will not benefit from any statutory rights such as overtime, vacation and notice or severance pay. The independent contractor is also not eligible for employment insurance benefits should the need ever arise.
· Since one of the benefits to the company is that it is able to maintain a more flexible workforce, there is less job stability for the independent contractor.
· The company will owe no notice or severance obligations to the individual pursuant to employment standards legislation and, may terminate the relationship without cause or reasonable notice, subject to the specific terms of the agreement between the parties.
· Finally, the independent contractor bears the risk of loss. Generally speaking, the independent contractor is personally responsible for all debts and liabilities that arise during the course of business.
We thank you for your interest in Worth Personnel Group, and look forward to working with you.
This is for general information purposes only, and is not intended as legal advice regarding your employment status, or obligations under the law. This information is not a complete list of items to consider |
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