Differentiating Yourself as an Independent Contractor NOT an Employee

Horseback riders with Canadian flagFrom Eagle in Canada — while this article relates to being an independent contractor in Canada, it has great advice for independent contractors in the United States including incorporate as a company and “do anything you can to differentiate yourself from the employees….”.  The story says:

“A current topic of conversation in the world of independent contractors (ICs) is a “focus” by Canada Revenue Agency (CRA) on determining the true independence of people operating as “independent contractors”.   A couple of bad things that can happen to an IC are (a) they are deemed to be an employee; or (b) they are deemed to be on a personal services contract.

Neither is good because it is likely that, in either case, any and all tax deductions will be denied (for several years back) and if deemed an employee there will be messy fines for non-deduction of normal employee deductions etc.  Not good for the independent contractor.  Not good for the staffing industry.  Not good for the staffing industry’s clients.

Here are a few things independent contractors should be know in order to prevent these situations:

    1. You need to think and operate like a business owner NOT an employee.
    2. You should read up on the rules that CRA uses to determine independence (pay particular attention to “control”)
    3. Incorporate as a company!
    4. You should do anything you can to differentiate yourself from the employees that you will invariably working alongside.  You should NOT look, act or “feel” like an employee.  Some thoughts on that:
      • Pay for any training you take.  It doesn’t need to be a lot of money, but pay something.
      • If you go to an employee social event paid by the employer, pay something towards your attendance.  It could even be a donation of a door prize…..”

Read the full story at Differentiating Yourself as an Independent Contractor NOT an Employee

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