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The Great Canadian Guide to Small Business Payroll

Free Payroll eBooks for Small Business Owners and Startup Founders in the United States & Canada

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Employees vs. Contractors The CRA determines a worker's status by looking at: - The intent of the relationship – if the written agreement is a "contract of service" (which signalling employer-employee relationship) or a "contract for services" (signalling a business relationship). - The amount of control the worker has in the job. The more that the employer controls the worker, the less likely it is that the person is a contractor. Consequences of Misclassifying Employees as Contractors When you are starting out, you might think it's a smart idea to save money by hiring contractors because you don't have to worry about paying taxes, vacation, statutory holiday pay or benefits. But if you end up hiring a contractor who is actually your employee (based on CRA's legal definition), you'll end up paying hefty penalties for misclassification. 10 | www.wagepoint.com

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