Employee vs Contractor Rules in Canada

If you’re a Canadian small business owner, hiring a “contractor” can feel like the easy button: pay an invoice, skip payroll, and move on.

But CRA doesn’t decide worker status based on what you call it. CRA looks at the real working relationship - what happens day to day - and then decides whether it’s employment (an employee) or a business relationship (a contractor/self-employed).

In this in-depth blog post we cover:

• The CRA “two-step” approach (and why your contract isn’t enough)

• The key factors CRA weighs for most of Canada

• Common red flags that trigger reclassification risk

• What’s at stake (CPP/EI, payroll deductions, penalties)

• The “incorporated contractor” twist: Personal Services Business (PSB)

• A practical checklist for business owners

• …and more!

Let’s dive in!

Thank You For Reading. See You Next Time!

Think Team🙏