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The Difference Between Employees And Contractors

A blog post by Ask For Directions Training Instrucutor and lawyer, Corinne Boudreau (see link in the article)

Like many kids in Canada, one of my first jobs was as a babysitter for neighbourhood families.  I also delivered a weekly newspaper for a bit.  Besides getting paid to play with younger kids, I loved going to other people’s houses to see what books, magazines and movies they had.  And of course, also what snacks they had (we never had fancy snacks because my mom shopped at the local Co-op).

One of my most memorable babysitting gigs was for the head of the Canadian Coast Guard College (located in my home community of Westmount, Cape Breton).  It was cool to see how a family lived on the campus of this institution and I got paid the huge sum of $2 per hour (an increase from my other gigs).  

So babysitters are by and large a cute and sympathetic group and not one usually to be targeted by Canada Revenue Agency (“CRA”) for tax reassessment.  Or so you would have thought.  There have, however, over the years been a number of tax cases where CRA determined that babysitters were employees and not independent contractors.  In many cases, this resulted in families receiving letters indicating that they owed $$$ to CRA for back remittances for income tax, CPP and EI.  Yikes!

Now as a business owner, you obviously want to avoid these types of nasty letters from CRA (and other unintended consequences).  You could potentially fall into this situation if you hire a VA, social media manager or any other person to help out in your business if you don’t set up the relationship correctly.Who are you planning to hire in the next 6 to 12 months in your business?  Do you want them to be employees or contractors?  

I wrote a new blog post this week on the topic of the differences between hiring employees and contractors in your business.  I hope that this article will give you some information on how to set yourself up properly when you are hiring. Your legal guide, CorinneP.S.  Yes I do remember when $2 per hour was a lot of money,  a bag of chips was 25 cents and you had to remember to rewind movies that you watched when you were babysitting.
Patricia Dent
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