The main question here is who is running the ship. An employer reserves the right to hire or fire an employee, determine the wages or salary they receive, and decide when, where and how the work is done. According to the CRA, if, after reviewing all three categories of evidence, it is still unclear whether an employee is an employee or an independent contractor, Form SS-8, Determination of Employee Status for Federal Labour Tax and Income Tax Withholding PDF can be filed with the IRS. The form can be submitted either by the company or by the employee. The IRS will review the facts and circumstances and formally determine the employee`s status. Employees may have expenses that are directly related to their employment, such as the costs of . B car, as well as food and accommodation costs. Normally, the expenses would not expose employees to the risk of loss, as the expenses are unlikely to exceed their remuneration. As an entrepreneur, do you have the tools used by your employees? If so, it`s usually a point that speaks for an employee relationship.
If your team member owns some (or all) of the equipment that is to be used during their day-to-day operations, this could indicate a relationship with the contractor. Someone who is truly independent and works for himself would not normally be equipped with tools and equipment to do their job. To determine the status of an employee, cra examines the entire employment relationship and takes into account six main factors. None of the following factors alone are conclusive, but all contribute to the decision of whether an employee is an employee or an independent contractor. Here are some questions you should ask yourself when determining an employee`s status. If you answer yes to most of the questions, chances are your employee is an employee. If individual contractors do not have optional personal coverage for the duration of your contract, you may be held responsible for the costs incurred in the event of an accident at work. You are much more likely to be considered a contractor if you can prove that you were the person responsible for planning the work to be done, selecting the hours worked and choosing the standards to be met. A business that uses an independent contractor does not have to make a paycheck, which includes income tax withholding and Employment Insurance (EI) payment. If you have already filed a service-related complaint or requested a formal review of a CRA decision and therefore believe that you have not been treated impartially by a CRA employee, you can file a criminal complaint by completing Form RC459, Reprisal Complaints. To help you understand the process, we explain each factor below and show some indicators that the employee may be an employee or self-employed. Discuss the issue with your accountant or contact the Canada Revenue Agency if you have taken action but still do not know if you are actually an employee or an independent contractor.
Your employment status also depends on who makes the profit or loss of the business. As an employee, you are not responsible for paying any overhead and operating costs associated with running a business. Nor are they responsible for the employer`s debts. While you can earn more through bonuses and other incentive payment plans, you usually won`t encounter any chance of winning or risk of loss. Your extra income is not considered extra income on top of expenses, so it`s generally not considered a profit. As an independent contractor, you would have some financial risk and more chances to win. For example, a chance to win can occur if you leave a job prematurely, resulting in savings and the opportunity to quickly move on to other opportunities. You`ll likely make less money if the project takes longer than expected or in slow phases. You are also responsible for any debt you incur as an independent contractor. You can be an employee if your employer provides you with tools and equipment to do your job.
Your employer can use these tools and equipment at will and is responsible for repair, maintenance and insurance. If you are an independent contractor, you own the tools and equipment you work with. You have the right to use them and must repair, maintain and insure them yourself. You`ll also need to create your own workspace and cover maintenance costs. Some employees, such as carpenters and mechanics, sometimes use their own tools, although they are classified as employees. Even if you have a contract that says the employee is a contractor, the nature of the employment relationship still outweighs that. .
