085| Employee vs. Subcontractor

It is important to decide whether a worker is an employee or a self-employed individual. The facts of the working relationship as a whole decide the employment status. Overall, employment affects entitlements to #CPP and #EI benefits, plus income tax.

How do you determine if the worker is an employee?

The key question to ask is whether the person must carry out services independently of your business or as part of your business. If the person is an employee: these items will be the responsibility of the business:

• the business relationship is controlled by the company, not the worker

• the financial costs to perform the services are carried by the company

• the company provides tools or equipment to perform the work

• the worker physically performs the work at the company's place of business

Then how do you know if they are a subcontractor?

If the person is an independent subcontractor: these items will be their responsibility:

• the worker sets their own work hours from an independent work location

• they are not managed by anyone overseeing their services

• the worker can offer the same services to you and to anyone else of their choosing

• the worker provides their own tools and equipment to perform the work

To protect your business from liability should there be uncertainty or a "grey" area, it is best to put in writing what the business relationship type is and have both parties sign to it. That will prevent potential conflict and loss of unexpected funds.

As always, we are here to help! Contact Us with questions.

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