VANCOUVER, BC--(Marketwired - January 24, 2017) - As a team of chartered accountants based in Vancouver, the professionals at Mew + Company offer their services to many different types of businesses. Before an IT Professional-or any sole proprietor-rushes to incorporate, it's important to consider the responsibilities of incorporation, which includes more professional costs and more CRA filing responsibilities. For more, go to: http://www.mewco.ca/blog/checklist-it-consultants-considering-incorporation-bc-tax/
Canadian tax rules want to encourage entrepreneurship by providing low corporate tax rates and simplified methods of tax reporting. However, the tax system is not designed to give corporate tax breaks to employees disguised as self-employed consultants.
As the tech boom continues in Vancouver, many IT specialists and engineers are converging in the province to offer their highly demanded skills to the highest bidder. Because of the nature of the work, it's not unusual for an employer to hire self-employed consultants as needed for a specific job. Similarly, many IT professionals recognize the flexibility that comes with being a consultant and choose to offer their services on a project-by-project basis, rather than as an employee.
Before incorporating, consider if revenues are high enough to compensate for the costs-a typical benchmark is $150,000 per year. Additionally, make sure you are not a personal services business in the eyes of the CRA. This means you are not an employee that is incorporated. A personal services business does not enjoy the tax benefits afforded to a small business corporation. If a consultant can't get past the personal services business test, it is wise to either stay on the payroll or be a proprietor.
Other benefits mentioned in the article include income splitting and the GST Quick Method of reporting.
With the explosion of the IT sector in BC, many entrepreneurial IT professionals are considering going solo. To learn more about the process and how to structure yourself appropriately, it's best to sit down with an experienced chartered professional accountant to discuss the pros and cons. Otherwise, it may be more cost efficient and less grief to remain an employee after all.
About the Company
Mew + Company, Vancouver, is an ideal solution to the taxation problem. With a simple philosophy of building long-lasting customer relationships, the company has been serving corporate clients in a variety of fields-including restaurants, real estate, retail, and the service industry. Investing in their specialist services will undoubtedly be fruitful for all kinds of clients.
To learn more about Mew + Company and discuss their services, log on to http://mewco.ca/