Help! subcontract work

SUGGESTED

Hi,

My husband is working as a subcontractor for a company and receives weekly payments. I am wondering how I enter this? on the pay stub there is gross pay and net pay (after deductions). i listed the company as a customer, is this right? do i make a sales invoice? which amt would i enter in the sales invoice (gross or net pay?) would i then make a receipt when paid? also wondering how i enter gst (paid by company- on pay stub under earnings). there are also union dues and and other deductions, not sure how i enter this either (would the union dues & deductions go into shareholder account?) 

any help will be greatly appreciated,

Joanne

Parents
  • 0

    Is this company the only company that your husband is working for? Is his cheque showing the deductions such as CPP, EI, Inc Tax, etc ?

    If so then he is an employee.

    You would not enter the company as a customer nor would you send the company an invoice.

    Is your company you are trying to enter information into an incorporated company? If not then there is no shareholder loan account.

    Have a look at this link - it may help you.

    www.cra-arc.gc.ca/.../README.html

    If he is an incorporated employee then he has essentially no deductions in his corporation and has to file both corporate and personal tax returns. I believe it was in 2013 year that CRA made these changes and he is classified as a Personal Services Business.

    You may want to consult with an accountant before you go further.

  • 0 in reply to Smith and Co

    There are no CPP, EI, inc tax deductions. he is considered a sub contractor and provides a "service" to the company. the only deductions on the cheque are union dues (as a welder, he is part of a union within the company he does work for). does that make sense?

    This is an incorporated  company so there is a shareholder loan acct

Reply
  • 0 in reply to Smith and Co

    There are no CPP, EI, inc tax deductions. he is considered a sub contractor and provides a "service" to the company. the only deductions on the cheque are union dues (as a welder, he is part of a union within the company he does work for). does that make sense?

    This is an incorporated  company so there is a shareholder loan acct

Children
  • 0 in reply to joanne_6

    I am not familiar with the union dues charged on a subcontractor. You may still wish to consult an accountant to be sure that your husband will not be considered a PSB employee (Personal Services Business) and how to handle the union fees that are deducted. It would need to be recorded somewhere in the books.

  • 0 in reply to Smith and Co
    SUGGESTED

    There are very specific criteria your husband must meet in order to be considered a Subcontractor.

    A few of the criteria:

    - He decides how the job will be done (within reason - welding is pretty specific on how it would get done)

    - He provides his own equipment

    - He can have his own employee perform the job if he so chooses

    And many more......

    Check this link and decide on each point VERY CAREFULLY. www.cra-arc.gc.ca/.../rc4110-e.html

    Many companies are trying to cut employee costs by calling their people Contractors, when in fact they are employees. The consequences when they are set right can be very hard to cope with as the employer attempts to reclaim deductions not taken in the first place. Protect yourself and make sure!