Go Back  British Expats > Living & Moving Abroad > Canada
Reload this Page >

IT contracting in Canada > Umbrella company required

IT contracting in Canada > Umbrella company required

Old Sep 21st 2015, 2:34 pm
  #16  
Dive Bar Drunk
 
JamesM's Avatar
 
Joined: Nov 2006
Location: Toronto
Posts: 8,647
JamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond reputeJamesM has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by dbd33
That's not the same thing. What you want is to incorporate without naming the company; you just get the next available number and use that as the name of the firm. The link is for getting some sort of tax number.

Why not get an accountant to sort this out? If you cock up the original set up you'll have years to regret getting it wrong and will spend the cost of an expert many times over on excess tax and source deduction bills.

I suggest that doing this yourself is as sensible as pulling your own teeth.
Try these guys:

CPA And Accountants Tax Services. Incorporating In Ontario

1.800.465.7532

If memory serves they can set you up for a few hundred dollars.

We have several hundred recruiters on our books and refer new migrants to these people all the time.

I had to get to the office first to get their details or I would've responded sooner.

Also I knew DBD33 was the guy for this sort of stuff.
JamesM is offline  
Old Sep 21st 2015, 3:41 pm
  #17  
Banned
Thread Starter
 
Joined: Sep 2014
Posts: 233
BritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Great, thanks guys
BritCanadaNewbie is offline  
Old Sep 22nd 2015, 1:16 am
  #18  
Banned
 
Joined: Jul 2014
Posts: 36
Jack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to allJack_Judge is a name known to all
Default Re: IT contracting in Canada > Umbrella company required

Sounds like you've progressed beyond this, but having gone through your experience I'd say the first call would be to the agency that placed you. If you need a quick fix to get your feet under the desk, then they may take you on as a temporary employee, they effectively become your umbrella company. Randstad helped me out like this when I landed in BC a few years ago.

The agency should also be able to tell you what the clients' requirements are, they may well be satisfied dealing with a "sole proprietorship", which is quicker and cheaper to set up.

This won't have been the first time the agency have dealt with similar situations, ask if they've got any local contacts who can help you set up, they may well have something like a "Welcome to Canada" info pack, Ajilon had this back in the 90s.
Jack_Judge is offline  
Old Sep 22nd 2015, 1:37 am
  #19  
Assimilated Pauper
 
dbd33's Avatar
 
Joined: Mar 2005
Location: Ontario
Posts: 40,014
dbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by Jack_Judge
The agency should also be able to tell you what the clients' requirements are, they may well be satisfied dealing with a "sole proprietorship", which is quicker and cheaper to set up.
The client is less likely to have a requirement in this regard than the agency, it's the latter that's at risk if the CRA deems the contractor to be a de facto employee. This isn't a problem with short contracts but it's common now for a contract to go for ten or fifteen years, without the deniability offered by the corporation it's hard to argue that someone who is paid from one source, the agent, has the hours set by that agent and works in one location under the control of the agent is not an employee of the agent.

The client has a bit more of a case that they're in a commercial relationship with the agent and don't care how the agent gets the work done (although this is nonsense, of course, contracts now are usually just a means to have long term staff and to avoid providing benefits to them).

The problem with the corporation isn't in the short term, it's good for taxes, and good for avoiding liability for one's errors. The problem is when and how to wind it up and the cost of winding it up.
dbd33 is offline  
Old Sep 23rd 2015, 9:51 pm
  #20  
Grumpy Know-it-all
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by BritCanadaNewbie
Hi Folks,
I have a new IT contract to start in Toronto. However the only thing I have is a SSN/Canadian bank account/PermVisa and my UK P45,
What do I now need to do? In UK I usually have an umbrella company (In UK you can simply register in a day )
So in Toronto what is the first thing I need to do?
Is there anyway it can all also be done online?

thanks guys any advice would help I need to get this done asap.
Everyone seems to be focusing on corporations, if you live in Canada and it's just one single contract, you can just be self-employed. You invoice them, you collect HST, you file a T2125 with your T1 every year. More information on the CRA website. You have to register for a GST account. GST number goes on your invoices.

If you really, really, really want to you can set up a CCPC, get it a business number, GST account, payroll account do payroll, file a T2 every year but that sounds like overkill for a single contract.

We had this thread the other day - are you in fact an employee of said company because it sounds as though you are if it is your only contract.

In which case, they put you on the payroll (assuming the work is being done in Canada).
Steve_ is offline  
Old Sep 23rd 2015, 11:24 pm
  #21  
Assimilated Pauper
 
dbd33's Avatar
 
Joined: Mar 2005
Location: Ontario
Posts: 40,014
dbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by Steve_
In which case, they put you on the payroll (assuming the work is being done in Canada).
That's exactly what everyone wants to avoid and is the primary reason for forming a corporation.
dbd33 is offline  
Old Sep 23rd 2015, 11:29 pm
  #22  
Grumpy Know-it-all
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

But why would you want to do that if you only have one contract?

Can't see a point.

Saves you from doing all the tax paperwork and in addition the employer has to pay half the CPP.

And in any event as we were discussing in the other thread, it's not really a choice you have, legally you have to go on the payroll if it is essentially an employer/employee relationship.

Unless of course you enjoy filling in T2125 or T2. I know I don't.
Steve_ is offline  
Old Sep 24th 2015, 1:28 am
  #23  
Assimilated Pauper
 
dbd33's Avatar
 
Joined: Mar 2005
Location: Ontario
Posts: 40,014
dbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by Steve_
But why would you want to do that if you only have one contract?

Can't see a point.
I thought you were in the computer business but, ok, here's how it works.

Companies used to engage contractors because they needed some highly specialised skill for a short while and were prepared to pay highly for that skill. The contractors necessarily moved from company to company working at each for a limited term, often several at one time. The tax authorities recognised that form of work and allowed concessions to the contract workers. Inventive contractors pay minimal, if any, taxes beyond CPP and EHT.

Over time the cost of benefits has become more important to employers and they've sought to casualise the labour force, eliminating such frills as medical benefits, pensions, paid sick time, paid vacation and stature that might lead to having to pay severance. WalMart, for example, achieves much of this by not giving workers enough hours to qualify as full time in the eyes of the law.

In the case of computer workers, contracting has evolved to allow "employers" to meet these objectives, companies put contractors on revolving three or six month contracts for years or decades; they never become employees. Workers accept those terms and conditions because they're able to fiddle their taxes. The tax avoidance on which the arrangement depends requires that there be a level of deniability to the situation. This is achieved by the contractor incorporating, the "employer" is then insulated from the idea of the contractor being a person.

I think this circumstance evolved by accident, contractors are generally greedy and short sighted and individual managers in large companies love to use contractors as it generally avoids having to deal with HR and, in the case of government agencies and quangoes, often comes with a kickback from the pimps. Nonetheless, it more or less meets the needs of both the "employer" and the contractor.

However, the real winners from this evolution in the business are the pimps. 40% of the billing rate is reasonable enough if you have to keep finding a new contract for each person every six months. After ten years or so of doing nothing it's rather a windfall.
dbd33 is offline  
Old Sep 25th 2015, 10:55 pm
  #24  
Grumpy Know-it-all
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Look in the UK, which is where he's from HMRC have the IR35 rules which compel you to do the payroll as for an employee if it's a single contract.

As pointed out already, CRA have a similar rule although they don't enforce it quite as strictly.

You can go on a payroll for three or six months no problem.

Workers accept those terms and conditions because they're able to fiddle their taxes.
How, exactly? You've got to pay double CPP so any screwing around with your expenses doesn't really help seeing as you've also got to pay for your own prescription drug plan, dental plan, etc.

But anyway, yes on a practical level I do have my own company but if it was a single contract for any length of time I would be pushing to go on the payroll.
Steve_ is offline  
Old Sep 26th 2015, 1:34 pm
  #25  
Assimilated Pauper
 
dbd33's Avatar
 
Joined: Mar 2005
Location: Ontario
Posts: 40,014
dbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by Steve_
How, exactly? You've got to pay double CPP so any screwing around with your expenses doesn't really help seeing as you've also got to pay for your own prescription drug plan, dental plan, etc.
A simple example is that, if you have a corporation, you can share the income with anyone near you who has no other income, you get to use the tax allowances of the wife and children and neighbours. It's only CPP and EHT that are really unvoidable.

I don't think contractors generally have dental or drug plans. If you want lots of drugs then you probably also want lots of time off so, yes, it's better to be an employee.
dbd33 is offline  
Old Sep 27th 2015, 12:32 am
  #26  
BE Enthusiast
 
stuabroad's Avatar
 
Joined: Jul 2007
Location: AB since Jan 2009!
Posts: 459
stuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond reputestuabroad has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

If you're going to be running your own incorporated company for any length of time, get yourself a good accountant - don't try to wing it in a foreign country. BE advice is helpful but can end up confusing you with multiple contradictory feedback. The setup is simple but you need to understand the administrative overhead - this is not the UK where an umbrella company will do all your monthly paperwork for you for a fee, unfortunately.
stuabroad is offline  
Old Sep 27th 2015, 12:50 am
  #27  
 
Joined: Sep 2008
Posts: 12,830
Aviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by stuabroad
If you're going to be running your own incorporated company for any length of time, get yourself a good accountant - don't try to wing it in a foreign country. BE advice is helpful but can end up confusing you with multiple contradictory feedback. The setup is simple but you need to understand the administrative overhead - this is not the UK where an umbrella company will do all your monthly paperwork for you for a fee, unfortunately.
I would concur. A good accountant should at the least save you what they cost, so it is break even or even cost saving.
Aviator is offline  
Old Sep 27th 2015, 4:10 pm
  #28  
Banned
Thread Starter
 
Joined: Sep 2014
Posts: 233
BritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond reputeBritCanadaNewbie has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Yup. Appreciate the tips guys. Can be confusing compared to UK.
Here you get a contract.
Sign up (probably a online form) to an umbrella
give them your P45.
And thats it.
Alot of bullshit and messing here about for such a simple setup.
BritCanadaNewbie is offline  
Old Sep 27th 2015, 5:23 pm
  #29  
 
Joined: Sep 2008
Posts: 12,830
Aviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond reputeAviator has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by BritCanadaNewbie
Alot of bullshit and messing here about for such a simple setup.
Setting up a corporation is not simple anywhere. Get it wrong and it can be very expensive and also not benefit from limited liability.

I ended up in court with a guy claiming limited liability. Because he got it wrong, not only did he lose the case, the judgement was against him personally, not his company. Made collecting a lot easier as I could sieze all his assets, personal and corporate.
Aviator is offline  
Old Sep 27th 2015, 6:25 pm
  #30  
Binned by Muderators
 
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
JonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond repute
Default Re: IT contracting in Canada > Umbrella company required

Originally Posted by BritCanadaNewbie
Alot of bullshit and messing here about for such a simple setup.
It is almost as if Canada is a foreign country. If you struggle with difference now your future posts will be most entertaining.
JonboyE is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.