How to Avoid the Personal Services Business Rules - IT Contractors & Independent Consultants
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- čas přidán 23. 07. 2024
- Understanding how to avoid the personal services business rules for IT contractors and independent consultants can help lower your taxes considerably.
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Table Of Contents
00:50 - What Is A PSB?
01:24 - Exercising Control
01:35 - Bring Tools and Equipment
02:21 - Include Subcontracting Work
02:44 - Demonstrate Financial Risk
03:03 - Opportunity For Profit
03:21 - Financial Dependence
03:34 - Additional Tips
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Disclaimer:
The information provided in this video is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided in this video.
Hi, thanks for your comment.
With proper planning, I have successfully advised many of my clients from being classified as Personal Service Business
Thank you , that was direct and very informative.
Hi Dave, thank you for your kind feedback.
Thanks for advice and scaring the s**t out of me. Now, I wont be able to sleep at nights. Independent contractors do have to go to work like employees, and do get paid by hourly rates. So. .
I do not see how any client/employer will agree to these changes in contract. Not for milestone bonus, not for bringing your laptop, not for getting another contract client, and definitely not for hiring another/subcontract employee for this client work/ site. Nothing of that will work.
Only thing that sounds feasible is printing your cards & maintaining the website. Is that enough ? sounds not. Any thoughts?
And yes, hiring your spouse to do book-keeping ... does it count ?
Great tips! Really helps a lot. I have a another question - I was hired as a contractor (I have corporation) by intermediary (agency) to perform IT services to other (third company).
I am getting paid by intermediary, not by third company.
Is it enough not to be considered as PSB?
I would like to avoid being considered as PSB.
Thanks in advance!
Pol
Was your case considered as small business and not PSB?
Thanks for your advice - I have one more question. You mentioned that a contractor should hire an employee to do support functions like bookkeeping. My wife is a bookkeeper and she is going to bill me directly. Would it be OK with the Revenue of Canada or I should hire someone that is not related to me?
Pretty good advice there. However I'm not sure how realistic modifying contracts to include some of those conditions are.