How to Become an Independent Contractor and Not an Employee

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hi my name is Alan Madden I'm a

chartered accountant and a tax expert in

the Toronto Oakville in Mississauga

regions of Ontario Canada the topic of

today's short video is how to become an

independent contractor and not an

employee the reason you want to be an

independent contractor and not an

employee is because independent

contractors have far more write-offs and

pay a far lower tax rate than employees

so you'll keep more after-tax cash money

in your hands so how do you do it well

it all comes down to the contract

between you and your customer or

quote-unquote employer the agreement

must contain specific clauses so it

passes the cia's tests of independent

contractor versus employee the first

factor is control if it appears that

your customer or employer is exercising

a great deal of control over you then

it's not going to fly you're going to be

deemed an employee so consider putting

in the agreement a control factor such

that it is the company's understanding

that you the independent contractor will

work independently with minimal or no

supervision there you go

the second factor is tools and equipment

if your employee it's likely that your

employer will provide your the tools and

equipment for your trade make sure it

says in the agreement therefore that you

the independent contractor are

responsible for supplying your own tools

and equipment for example a laptop and

printer factor number three financial

risk employees don't take any financial

risk generally speaking however

independent contractors have financial

risk so in the

agreement between you and your customer

or employer it's important to stipulate

that you are responsible for paying

costs cost could include rent as well as

a share of the overhead expenses the

rent doesn't have to be huge

but it should be a reasonable amount

factor number four opportunity for

profit employees don't have the same

opportunity for profit as do independent

contractors so it's important to put in

the employment agreement that you have

the opportunity for profit such as a

milestone payment or a success payment

for work successfully completed the most

important factor that you should

consider putting into your contract with

your customer is that it is the

intention of both parties for you to be

treated as an independent contractor who

is self-employed and for the payer to be

treated as a customer this is not an

employer-employee relationship a lot of

court cases have been decided on this

very factor alone in treating an

individual as an independent contractor

as opposed to an employee so if you want

to save itself a ton of money I

encourage you to visit my website which

is shown at the bottom of the screen

HTTP Madden CA calm and also get access

to your free report 20 free tax secrets

on how to beat the tax ban by clicking

on the URL which is shown at the end of

this video thanks for watching and talk

to you next time