akitared

Hi,

Can anyone offer any guidance on how I can go about setting up an IT Consultancy firm in Calgary, AB? I have been offered two positions recently, both contract to perm. I have always been a perm employee, as such, I have no experience on how to setup a consultancy firm.

Any ideas, suggestions or advice?

Thanks in advance.

Brownstar

You can work as a Sole Propriety/Independent Worker where by you get paid monthly by the agency and you invoice them for GST which they pay you as well but you have to pay that to the government. Your best bet is to talk to an accountant as to how to pay GST and taxes etc but essentially all you need to do is register as a Sole Prop/Independent Worker on the Revenue Canada website.

dbd33

That depends on the pimp; our firm doesn't deal with subcontractors who are not incorporated. The incorporation provides a degree of indepence which is a safeguard against RevCan declaring a de facto employer/employee relationship and which may be useful in the case of litigation over professional liability and/or workplace injuries. Incorporation in Ontario is not a big deal, I don't know about Alberta.

Brownstar

The employer/employee relationship issues can be mitigated in a contract especially if the individual works as a Sole Prop but the best route for the employer/agency is that of an Incorporated company. However there are potential issues in being incorporated if you are not a PR or citizen.

akitared

Thanks for the replies guys, I am a PR so hopefully no issues on the incorporation, this is quite a minefield. It would seem sole proprietor is the way to go?

Would sole proprietorship allow me to "employ" my wife?

dbd33

The snag with incorporation is that shutting down the firm is the same hassle as starting it, you don't want to do it if you can avoid it.

The answer to the second question is "yes".

JonboyE

If the employer does not insist that you incorporate (and I am guessing if it is a contract to permanent they will not) then sole proprietorship is the way to go. You need to register for, and collect and remit, GST. You should probably get a business license if you are working from home. If you trade under anything under your own name you will need to register your tradeing name.

You should also mention it to your household insurer.

Other than that you are good to go.



Try and erase the word "employ" from your memory. If you employ your wife you will have to withhold tax and and CPP and remit this to the CRA. There is nothing to stop you paying your wife (on a subcontractor basis) a reasonable amount for any business services provided - filing, typing, marketing, or whatever. You get more effective income splitting by setting the business up as a partnership. Just remember that you may need to justify her share of the partnership income at some point in the future. An initial injection of finance into the partnership perhaps?

akitared

Thank y'all.