How to Open an Independent Contract Company in Canada: A Comprehensive Guide
Becoming an independent contract in Canada provides you a unique opportunity where you take up control of your career work with several clients and be your boss, scheduling it all. Whether you are a truck driver hoping to land contracts with major companies such as Walmart, an IT technician offering specialized services, or an electrician seeking to expand your business, forming an independent contract company can pave the way for entirely new opportunities for professional advancement.
This guide will take you on a walk-through of how to open an independent contract company in Canada, including very important aspects such as Workers’ Compensation (WSIB) and examples of how one can thrive as an independent contract of different professionals. We will also introduce to you the benefits of incorporating in Ontario and how Online Business Registry can assist you in setting up your business.
Why Open an Independent Contract Company?
There are a good number of reasons for working as an independent contract:
- You will be in a position to decide on the type of projects to undertake, when to work on them, and your working hours.
- Since you are eliminating the middleman, you have better leverage with clients for higher rates.
- The opportunities are diverse in that you can work with many clients from different industries, enabling you to diversify your income sources.
- Business Growth: Being your own boss, you can grow your business by eventually hiring other people, and you can branch into several locations without any limitations.
How to Start an Independent Contract Business in Canada
1. Choose the Business Structure
The first step to opening an independent contract business is to choose its business structure. You have several options for the form that your business can take in Canada:
- Sole Proprietorship: This is a simple and cheap structure where you and your business are actually the same legal entity, but it does mean that you will be personally liable for any debts or legal issues.
- Incorporation: Incorporation creates a separate legal identity for the business entity with limited liability protection to the owners’ personal assets in the event of business-related legal or financial problems.
- Incorporate in Ontario: Most businesses incorporate in Ontario because the province supports and is friendly to businesses. When you incorporate, you get benefits like tax breaks and more credibility.
2. Register Your Business Name
After deciding on your business structure, the next thing is to register your business name. If you are incorporating, make sure that the name you want to use is not already being used by another business.
Example: For truck drivers that wish to register the company name “Speedy Haulage Solutions,” the name must be searched for availability.
Online Business Registry Assistance: By providing a business registry name search, they are able to provide verification of availability for registration as well as facilitate the submission for NUANS reports if necessary for Ontario incorporation.
3. Apply for a Business License and Permits
Most industries need certain licenses and permits before they can be legally established in Canada. This is particularly important for sectors such as trucking, as there are specific rules.
Example: A truck driver may require a commercial driver’s license, permits to transport goods across provincial borders, and meet safety regulations set by Transport Canada.
4. Register for GST/HST
It is mandatory that a business earning over $30,000 in a year registers for Goods and Services Tax (GST) and Harmonized Sales Tax (HST). This then enables you to be able to charge these taxes from your clients and submit them to the Canada Revenue Agency (CRA).
Top tip: Even if your revenues are below the $30,000 level, registering for GST/HST can give you status as a business and get you input tax credits on your own expenses.
5. Get WSIB Coverage
The Workplace Safety and Insurance Board (WSIB) offers worker’s compensation insurance in Ontario and is yet another vital reason independent contract may need to have it, especially for working in high-risk industries. WSIB coverage protects you in the event of a work-related injury or illness with financial compensation and medical benefits.
Example: An electrician, if he is acting as an independent contract, should register for WSIB coverage to protect himself in the case of a working accident on the client’s premise.
Assistance in Online Business Registration with the Business Registry: Assistance with registration for WSIB can be obtained under the business setup services of Online Business Registration. This will make you fully meet the workplace safety regulations of Ontario.
6. Set Your Financial and Administrative Systems in Place
Good administrative and financial management is needed to run an independent contract business. Key steps include:
- Open a Business Bank Account: Keep your personal and business finances separate by opening a specific bank account for your business. This will simplify your bookkeeping and easily track your business transactions.
- Install Accounting Software: Invoicing, expenses, and tax filings can be done through accounting software. This will make you organized and ready when the tax season comes in.
- Buy Business Insurance: Another industry-specific coverage that you might need includes liability coverage to protect your business from associated risks.
Register Independent Business Examples in Canada
1. Truck Driver
You can be an register independent business as a truck driver, leading to owning your trucking business. Also, you can secure contracts with major companies like Walmart, allowing you to take on more lucrative jobs by managing your schedule independently.
How to Get Started:
- Incorporate Your Business: Incorporating in Ontario will provide legal protection for you as the business owner and increase credibility as you seek to get contracts with big corporations.
- Register for WSIB: Make sure you are covered for workers’ compensation in case one of your employees has an accident on the road.
- Get the Proper Permits: Apply for any permits required to transport goods across provinces.
Example: John was a seasoned truck driver who had decided to incorporate his business, “John’s Haulage Inc.”. Now, after contracting with Wal-Mart, he is running his own fleet and hiring additional drivers to meet the demand.
2. IT Technician
You can provide businesses with services such as network setup, cybersecurity, and technical support for those businesses unable to handle these services in-house. Staying a contract would also mean that you are free to move into other niches or widen up on services to attract more customers.
How to Start:
- Incorporate Your Business: By incorporating your business, it will appear more professional, making it easy to convince corporate businesses to contract you.
- Register for GST/HST: Charge and remit taxes on your services to be tax compliant with Canadian laws.
- Buy Professional Liability Insurance: To safeguard from potential claims for your services.
Example: Sarah is an IT technician who has incorporated her business as “Tech Solutions Inc.” and is now offering cybersecurity services to small businesses throughout the province of Ontario. Her incorporation status supported the business to sign deals with larger firms.
3. Electrician
As a self-employed electrician, you can offer electrical services to both residential and business clients. In fact, since there are normally two peak times during the day when houses and commercial buildings use the most electricity, your business may benefit from working with both types of clients. And by incorporating your business, you can take on bigger projects and eventually hire other electricians to help grow your business.
How to Get Started:
- Incorporate Your Business: It affords you legal protection and will make it easier for you to land larger contracts.
- Register for WSIB: Ensure you’re covered in case of work-related injuries while on the job.
- Get Necessary Licenses: Make sure you are certified and licensed to practice as an electrician in your province.
Example: Mike, an established electrician, registered his company “Mike’s Electrical Services Inc.” After winning a contract for electrical installation of a newly constructed commercial plaza, he assembled a group of electricians to oversee the project.
Incorporate in Ontario for Your Independent Contract Business
There are plenty of reasons for you to incorporate your independent contract business in Ontario:
- Limited Liability: When you incorporate, you create a separation between your personal assets and your company’s assets. This means your home, car, and personal savings can’t be accessed if your corporation is sued or goes bankrupt.
- Tax Benefits: An incorporated business in Ontario is eligible to receive some tax benefits, including the small business rate.
- Credibility: It portrays your business professionally and will enable you to secure contracts with larger companies.
- Business Continuity: The incorporation ensures that the company is provided with permanence. An incorporated business can carry on in life and continue to exist even if its owner retires or dies.
Online Business Registry:
Registering a Business has now become convenient and cost-effective through Online Business Registry. Some of the services they provide are name search and registration, preparation and filing of incorporation documents, and after-incorporation services to maintain statutory compliance.
Conclusion
Opening an independent contract business in Canada is one of the exhilarating steps you can make in life toward greater professional independence and financial growth. By following the steps provided in this guide, one is able to set up the business efficiently and position for success in the chosen industry.
So, whether it be a truck driver who would like to contract with big companies, an IT technician with specialized services, or even an electrician targeting large contracts, Ontario offers you many benefits: legal protection, tax benefits, and increased credibility.
For a trouble-free experience, give us a call here at Online Business Registry. Making your independent contracting business an Ontario incorporation is a breeze with their expert services. Now, you can focus on what you do best: growing your business and serving your clients.
