Creating a successful small business is all about using your funds in the most effective way possible. Oftentimes, that means developing a team to shore up the skills that you lack; inventory management, customer service, research and development, and marketing all generally require experts working as a team, especially if you have the funds to establish a department for each. Many startups find, however, that they can’t hire all of that staff all at once; they need someone to help them with a particular problem, but won’t be able to keep that person as an employee. This is where independent contractors come in handy.
Independent contractors run their own business. That comes with a lot of implications; you won’t need to pay contributions into an independent contractors CPP, for example, because they pay the entire portion themselves. If you provide healthcare benefits to your employees, independent contractors needn’t be enrolled onto the program; they likely have their own methods of dealing with healthcare costs. It’s also easier to end a relationship with an independent contractor if you no longer require their services or you feel their work isn’t up to your standards, while terminating an employee can be arduous work.
There are several advantages to hiring a contractor to do work for you; the most all-encompassing of the advantages is flexibility. You can hire a contractor, end the contract, then hire them again a few months down; they’re not on the payroll, so you won’t need to pay them to sit around and do nothing. Contractors give you quick access to skillsets you don’t have on staff; if you work in a fast-paced, tech oriented industry, a contractor can help you incorporate new technologies into your workflow without breaking the bank, especially if the work associated with the technologies is mostly front-loaded.
It is important to understand that CRA does not allow employees to be paid as if they are outside contractors. It isn’t always clear if a contractor meets the definition of an employee. CRA has guidance on their website that you should consult to determine if your worker can be considered a contractor for employment tax rules.
There are advantages to hiring permanent members to your staff, of course. Team building is nothing to scoff at; finding a group of people who get along and love their work is important for any business. You shouldn’t look to hire contractors if you know the work isn’t going to be temporary; by hiring permanent members, you’re more likely to get buy-in for your projects, and that little bit of extra effort when you need it. Members working together who understand the goals and philosophy of your company will be better equipped to produce results that fall in line with your vision for the company.
When hiring a contractor, it’s important to be mindful of the same sort of steps you would take when hiring a new employee. Don’t just look at reviews; conduct interviews and check references. Make sure the contractor is included in any communications that directly impact their work, and be sure to pay them promptly, so that your company is well-reviewed by contractors; it’s a two-way street. There are efficient Winnipeg accountants who you can hire on a case-by-case basis; similar to contracting work if having an accountant on hand is out of budget for you.