So You Want to Hire a Contractor...

A trend we are seeing on the rise is self-employment as the gig economy takes off. But what does it mean to be a contractor versus an employee? It may seem attractive to hire a contractor over an employee because then you do not have to worry about remitting payroll deductions to CRA and you do not have the same commitment to an employee contract, which usually appeals to small businesses and startups.

Most people do not know the difference between an employee and a contractor, so if you don’t, you are in good company. The bad news is that if you do not withhold the necessary source deductions that you would if they were employees, it can result in a hefty fine and penalties on late payments.

It goes without saying that misclassification is risky business. It’s best to consult CRA’s RC4110 Guide to help you determine a worker’s status. Here are some helpful tips to help you figure it out:

Still not sure? You can ask CRA for a ruling via your CRA account or come talk to us. We would love to help!