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Sole Proprietor vs Incorporated for Independent contractor

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Sole Proprietor vs Incorporated for Independent contractor  Reply with quote  

I am a Finance professional in Ontario doing contracting jobs as a sole proprietor since past few months through a placement agency. Current arrangement with agency is that I work for the end client but get paid by agency. They deduct EI and CPP only (no taxes) and will issue a T4 with Box 29 as 11(means sub-contractor I believe but not sure). So apparently I will be able to claim some deductions as sole proprietor even though I am getting T4. Can anyone clarify/confirm if the deductions part is true? My wife also works part time as contractor.This year we both will earns above the HST threshold sowill need to register for that too.
Will it be beneficial for me to incorporate with my wife and that way we can save more taxes (more deductions allowed, income splitting etc), have one HST number. Will we be considered PSB by CRA? The downside of incorporating is that I will lose EI. Since I have just started contracting and my contract ends in July, in the likelyhood that I do not find another one for a few months after this ends, I will not get EI benefit. Please help understand pros and cons specific to my situation and advise best alternative. Thanks.

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Post Mon Nov 07, 2016 8:37 am
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