1. It is unethical. It indicates that you are willing to sell your integrity and honesty for the privelege of working on a project. You don't pay sales tax - it doesn't come out of your pocket, you simply collect it for the governement. So there is little incentive for you to rip off the government. You may feel pressured in order to win the bid, but consider whether you want to work for someone with such ethics. Interestingly, I've had teachers, police officers, Christian clergy and devout Muslims, among others all ask me over the years to 'work for cash', hoping to save 5 - 12% in sales tax. Either you are honest, or your not, simple as that.
2. It is illegal. Do you want audits, fines, assessments, bank accounts frozen, customers contacted by CRA, interest charges, jail time, legal fees, a criminal record? All these are possible consequences of fraud.
3. You never know if it is a test - to see if you are an honest person. Clients are trying to determine if they can trust you with thier most valuable possessions and working around their precious family. Trust is the only thing you are selling. People assume you are a proficient painter...what they want to know is if they can trust you. Trust and honesty go hand in hand. Best to have a solid policy and stick to it firmly and respectfully. You may even be talking to CRA/IRS auditor...
The two best days to hire a bookkeeper are the day you open your business, and alternatively, today.
Tomorrow is the wrong day to hire a bookkeeper.
Tomorrow means it's not a priority and can be put off until it becomes critical. Which is definitely is the wrong day, because when it becomes critical it means it's costing you a lot of money. Money because you have to take time away from producing and serving customers and allocate it to organizing that you put off in the past. Money because you likely will have lost or missed claimable expenses. Money because you may face penalties and interest for late remittances for GST, taxes, WCB and maybe payroll remittances. Money because you may not receive rebates and refunds you may be entitled to.
Two reasons you may be putting this off are because it requires a little work to get organized. But a bookkeeper can walk you through the process and help you with all that paper work stuff. A second reason may be because you feel it's too expensive - you just can't afford it. Let's analyze that one a bit closer...
Who gets to decide whether a worker will act as an employee or as a sub-contractor? It should be a key concern to independent contractors.
Some workers prefer the stability of a steady pay cheque and the ease of having taxes, EI and CPP deducted and remitted on their behalf at source. Other workers prefer the flexibility and tax write-off potential of sub-contracting.
My preference was strongly towards having subs.It offered me motivated workers, flexibility in scheduling, simpler books and less pressure. It kept labour as a cost of sales, not overhead.
So who should decide....workers or employers?
Turns out, neither...
If you operate your micro contracting business as a sole-proprietor or a partner in a partnership, one challenge you might face is remitting your personal income taxes in a timely manner.
One of the most effective business strategies was gifted to me about five years ago by a close friend who operated several micro businesses.
It is an extremely simple solution, but very powerful.
Michael Gerber, author of The E-Myth says: 'the system is the solution'. This system might work as well for you as it has for me...