Best Accountants in Owen Sound, ON

Employee vs contractor - what you need to know Depending on the nature of your business, you may have workers who are employees or contractors, or you may have both. Each has their merits, but it’s important to review which are which in order to meet your tax obligations. When you have an employee, you must withhold income tax as well as report on additional benefits. Contractors generally look after their own tax obligations. It’s against the law to treat an employee as a contractor. Significant penalties apply if you do, so it’s important to get it right. The simplest way to remember is: An employee works in your business and is part of your business. A contractor is running their own business. But how can you be sure that you’ve got an employee or a contractor on your hands, especially with remote work blurring the lines between employees and contractors? Does there come a point that you should actually be hiring a worker as an employee, when you thought they were a contractor? There are six factors to consider: 1. Ability to subcontract or delegate An employee is not able to subcontract or delegate the work. They must perform the outlined tasks themselves. If they can’t do the work themselves for any reason, say a prolonged illness, and someone else does it, this is substitution. Your business would then pay the other person to carry out those activities. A contractor can delegate the work as long as they’re not obligated to do it themselves as per the contract.