Hi all

Need some advice

We leave for Calgary on TWP next weekend OH is a nurse and has gained us the TWP and i have an SOWP. Our plan was based on me taking a year out to look after our kids set up house etc. until my youngest goes to Kindergarten next year.

My current employer has asked me to stay on as a consultant working from Canada. this is a great offer and I am delighted to be able to keep my hand in and have some extra cash coming in.

I have always been an employee I have no experience of being self employed here never mind in Canada.

Do I have to list as a business in Canada? are there any advantages to doing so?

I am not sure how much work there will be or how consistent so I have no idea about the level of income we are talking about here.

If anyone can point me in the right direction I would be delighted.

Cheers
Tom

Have a look at this site, the rules vary from province to province:

http://www.canadaone.com/ezine/june0...istration.html

I was incorpororated (in Ontario) and quite frankly, found it to be a beaurocratic nightmare. However, it is beneficial in some circumstances but you need to earn over a certain amount to gain any advantages.

You can incorporate provincially or federally. Remember, if you incorporate provincially, you are only protected in the province of incorporation should you be sued. If you are working outside of the province, it may be better to incorporate federally.

Rules vary by province. I am based in BC so it may not be the same in Alberta - you need to check this out yourself. However, assuming they are the same ...

I don't understand what you mean by "list". You can:

a) incorporate. As your business is simply selling your personal services I don't see any advantage in incorporating. A doctor might incorporate because they face potential personal liability claims of millions of dollars if they make a mistake. I don't know what your business is but unless you face a similar risk I wouldn't bother. Also, there are tax deferral possibilities if you earn substantial amounts of money, but you might as well wait until you are making your fortune before you go to the hassle and expense of running a company.

b) register you business name with the province. A possibility if you want to protect your business name. If you want to be called "Rocky Mountain Consultants" or something this will be a good idea. If you will just trade as lauder99 this is not necessary.

c) register you business with the Canada Revenue Agency (CRA). If all your sales are only to your ex employer in the UK, and your billings are less than $30,000 a year this is not necessary. Just keep records of your income and expenses and file a form T2124 (Statement of Business Income) with your tax return.

It your sales are more than $30,000 a year you must register with the CRA and open a Goods and Services Tax (GST) account. This involves a little bit of administration but is generally beneficial. Your theoretically charge GST on your sales to the UK, but the tax rate is 0% (so no difference). However, you can reclaim any GST you pay on supplies and services you buy for business use.

There is no Provincial Sales Tax in Alberta so no need to worry about that.

d) register your business with the city. If you run a business you are supposed to get a license to do so from your local municipal authority.

There are very specific reasons to incorporate a business. If this is a path you think about following, speak to an accountant and lawyer first. I have been in businesses for quite a few years, one as an independent consultant. Never incorporated. Some reasons include limited liability (not too effective these days), reduced small business tax, vs personal tax, structuring asset division between personal and business. Get advice before jumping in to this one.

You will likely need to take out a business license in the community you live in. If your sales exceed the GST threshold, (around $35,000) you may need to register and get a business number, but don't charge GST on out of Canada sales. If you plan to trade under your own name, rather than a business you don't need to register anything as a sole proprietor. Check local provincial rules though. You may want to look at business insurance and if working form home, tell your home insurer you run a business from home.

If you want to trade under a specific name and protect it in your local community you can do a name search and register the name.

http://www.servicealberta.ca/Consumers_Licenses.cfm

Personal income tax for self employed needs to be filed by June 15, but any tax owing need to be paid by April 30 to avoid interest. The tax year for self employed is the same as employed, Jan 1 to Dec 31. An accountant can help you figure this out and deductions.

Thanks guys

John thats a good link many thanks.

Johnboy I think the last 2 points are the most relevant. I am an Architect and my company have just rolled out a new software package that needs a certain level of support and assistance that I am going to provide from Calgary. I am going to get requests for 3D components and helpfiles and I will send them back when done. I don't think it will exceed $30000 a year but it might in time. the idea of claiming back GST sounds ok. I presume I could do that even if I don't do $30000/yr. Registering a business with the municipality is the sort of thing i was thinking might be an issue.

Thanks Surrey I intend to contact an accountant as soon as we get there and will now add a lawyer to that list.

I dont think liability insurance will be an issue as I am not designing buildings as such only components to be used in the design.

Many thanks guys its much appreciated. This is a great opportunity in the short term but I need to make sure I dot all the Is and cross the ts.


Cheers

Tom

Then you might want to use T2032 (Statement of Professional Income) rather than T2124, but the effect on the tax you will have to pay is zero.

It is mandatory to register if your sales exceed $30,000, but you can voluntarily register for a GST account at any time. You can only claim back GST on business expenses if have a registered GST account.

It shouldn't be a problem, there is no reason why the city should not give you a license. It will probably cost between $100 and $200 a year. A lot of people run small businesses from their homes. Not all of them apply for licenses. Apart from "doing the right thing" there is a good reason to get one:

if you run a business from home, you can claim a fair proportion of household expenses as a deduction from your taxable income. If the CRA ask to see your business license and you don't have one they will deny these deductions, arguing that they cannot be genuine business expenses if you do not have a license to operate a business there.

Take some advice on insurance, if something happens you may still be at risk. Registering a business is quite different from getting a business license. Many local bylaws require you have a business license - you don't get anything for it though. Registering a business as a sole proprietor protects your business name, really easy to do, getting a CRA business number allows for GST to be claimed back and paid. As John said, it is not optional over the threshold.

If you anticipate sales in a tax year to exceed the threshold you have to register. Your business number is also used for payroll and import/export accounts where they apply. If your sales are low, you may only have to file a GST return once a year. If you are below the threshold the hassle of filing returns may exceed the benefit of claiming GST back, unless you have some high expenses.

Thanks guys

That's great advice, I don't envisage great expenses at first but I am using a company software license to start with but if it takes off I will probably need my own at $6000 a pop. I will also have to upgrade my pc at some point too. Fter that it would just be general expenses internet, email, phone, stationary and proportions of domestic costs electric etc.

Cheers

Tom

My. Another risk I didn't know I was running. I rent a room from myself and claim it as an expense. I have no business license but this wrinkle wasn't mentioned even when I was auditted.

Not to be rude but SO WHAT!

If there is a tragedy or a costly claim how can you know someone will not come back on you and claim your component played a role?

My advice is to check it out with a reputable liability insurance broker. The cost might be minimal and may give you peace of mind if you get professional liability insurance.

Hi Mike

the reason I will not be liable is that I have no control over what is chosen to go in the building I am only drawing the symbol that is used in the CAD package I can be no more liable than the software company who provided the Cad package with its in built symbols. I will certainly take advice on all these factors as I am only interested in doing this right.

Cheers
Tom

ok then

I would check you are allowed to do this on a SOWP, I wasn't sure you could be self-employed but I could easily be wrong.

Wouldn't it be simpler to just be an employee and get money that way?

Hi Gryphea

It might be, and that's the reason for the questions I need to understand the pros and cons so that I can make an informed decision with my company. I dont see it being a huge demand or for very long I think its really just to allow an extended transition as I led the project to introduce this software. They seem to think it will be ongoing and growing to the extent I think they see me getting back to full time at some point in the future.

On the face of it it seems like a great solution in our circumstances but I just need to understand all the ins and outs before i commit to a plan.

Cheers to all you've really helped me straighten out my thinking on this.

Tom