If you register a corporation to work for a single company, than the CRA may consider it to be a personal service business if:
The CRA looks at the following elements when deciding whether you’re an employee or contractor:
If you work for multiple companies, then you’re probably OK. If you provide all your own tools/equipment/truck, have control over how & when you do your job and take on risk then you should also be fine. Check out this link if you’d like to dive deeper into whether you’d be considered an employee.
The tax consequences can be significant. If your corporation is considered a PSB, then:
Risk mitigation – steps to take if you think your company may be considered a PSB:
It is very common in Northern Alberta and BC for oil & gas companies to require you to set up a corporation and this is a grey area for a lot of companies. If you feel like your company might be considered a PSB, speak to your accountant.
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