Why Work 8 hours if it Only takes 4? - Working Your Next Job as an Independent Contractor

Why work 8 when you only need 4?

Working smarter, rather than working harder. Achieving your employment goals while simultaneously reaching your personal aspirations. Finding new ways to thrive in todays working space.

Have you considered becoming an independent contractor ?

When we think of contractors we often think about plumbers, electricians, and carpenters. But any profession can be contracting there work. But why would you want to ? Let’s explore the benefits of turning being an employee to becoming a independent contractor.

Work Life Balance balancing your work life and your personal life is vital to being a productive person. establishing a balance is key in performing at your highest capacity in all aspects of your life. Becoming an independent contractor allows you to better control your work hours, while also clearly establishing your tasks. Knowing what you need to get done and getting it down outside of the pre established 9-5 restrains. Having clear tasks will help and allow you to allocate your time accordingly between work and life.

Taxable Benefits Writing off expenses is an allowable legal way of reducing your taxable income. Expenses you incur while working as an independent contractor will reduce your taxable income and in turn reduce your taxes paid, which leaves more money for you to spend on what you actually want to spend it on. Such expenses include vehicle (gas, insurance, maintenance), meals, equipment, home (utilities, mortgage interest, property tax). All these things and more and reduce taxes.

Give Yourself a Raise No one will ever pay you like you pay yourself. Why ask someone else for a raise when you can give yourself one. Becoming an independent contractor will allow you to expand your income beyond one place of employment. Time is your most important resource, and by reducing your time working at one place, you can free up time and work other places as well. The opportunity to increase your income grows exponentially as an independent contractor.

These advantages sound good, but how will CRA recognize me as an Independent Contractor instead of an employee?

See factors below that CRA will consider when determining if you qualify as an Independent Contractor. CRA will look at these factors and more in these determination.

	Employee	Independent Contractor (IC)
Employment Status	Usually working for one employer, at a time, thus limiting your income portfolio.	ICs can work for many clients/companies simultaneously.
Control	Employer has direct control over how/when work is done.	Independent Contractor have control over how work is done. Do work your way.
Tools & Equipment	Computer, modem, calculator etc are primarily provided by employer. Ownership, maintenance and such are the responsibility of the employer.	IC own tools and equipment required to get the job done. Although you are responsible for purchase costs, costs of repairs and maintenance are majority tax deductible.
Responsibility of Work	When your boss, supervisor or manager gives you a task, you are expected to complete the task primarily on your own.	Tasks are handled as you see fit. Which means you can assign tasks to others. Work in a team. Hire employees with skill sets that fit the task at hand. Salaries paid to your employees are also tax deductible.
Financial Risk	Financial compensation is primarily based on a singular employer. Income is normally fixed.	Financial compensation is or can vary among several employers or clients. Financial risk is bore by the IC. Existence of the IC as a business entity is not always solely based on a single client.

There are a number of advantages to becoming an independent contractor which include a better work life balance, tax benefits, financial flexibility, and the opportunity to explore your skill set. However dealing with the financial risk and lack of daily structure may not be for everybody.

Before becoming an IC you would first want to explore registering your business with the appropriate government body. We will explore business registration in a separate post.

Any further questions ? Leave a comment or contact us directly.