Accounting for incorporated contractors and trades

An incorporated contractor faces genuinely different tax questions from other small companies. Whether CRA sees a real business or a disguised employee changes the rate on everything. Paying subcontractors brings reporting a retailer never sees. Equipment, trucks and tools dominate the balance sheet. And project billing brings cash in lumps that must fund remittances due on a fixed calendar.

The guides below are grouped in that order — classification first, because it is the one that changes everything else, then the people you pay, then the assets you buy, then how money reaches you personally.

Start here: the classification question

• Personal services business risk — what happens when CRA decides your corporation is really an employee with a business number: the small business deduction disappears and most deductions go with it. Read this first if you have one dominant client.
• How CRA tells a contractor from an employee — the factors actually weighed, from the worker’s side of the relationship. Read it before signing a long engagement that looks like a job.
• Accounting for contractors — the service page: what an engagement covers for a contracting corporation and how the year runs. Read it if you are deciding what to outsource.

The people you pay

• Subcontractor or employee, for a construction business — the same test applied from the hiring side, with the crew-based examples trades actually face. Read it before your first hire.
• T5018 subcontractor reporting — the construction-specific information return for payments to subcontractors, which surprises most first-time filers. Read it if construction activity is your main source of income.
• Choosing between hiring an employee and a contractor — the commitments each model creates for the business doing the hiring. Read it while you are still deciding, not after the offer.
• Payroll services — what running payroll properly involves once you decide someone belongs on it. Read it the month before the first pay run.

Equipment, vehicles and tools

• Equipment and CCA classes — how tools, machinery and trailers are written off over time and which class each lands in. Read it before a major purchase, when the timing can still be chosen.
• Capital cost allowance, generally — the broader rules behind depreciation for tax, including what happens when you sell an asset. The companion to the guide above.
• Vehicle and mileage deductions — the log CRA expects and how business use is actually substantiated. The single most commonly reduced claim on a contractor’s return.
• Company vehicle benefit calculator — estimates the taxable benefit when the corporation owns the truck you also drive personally. Run it before putting a vehicle in the company.
• Company car taxable benefits explained — the standby charge and operating benefit behind that calculation, in plain terms.

Getting paid, and keeping the books straight

• Salary vs dividends calculator — models both routes on your own numbers. Worth running every year, because the answer moves with your income and your CPP position.
• Salary vs dividends, in depth — the reasoning behind the calculator, including the non-tax consequences owners forget. Read it once, properly.
• CPP for incorporated owners — why taking dividends means opting out of CPP, and when that is a bad trade. Directly relevant to the choice above.
• Home office through a corporation — how the deduction works when the company, not you, is the taxpayer. Read it if the truck is your job site and the kitchen table is your office.
• Behind on your books? — for when several years of receipts are in a box and the filings are behind. Read it if that describes the situation honestly.

If you are in the trades specifically

• Construction accounting in BC — holdbacks, progress billing and job costing, which general small business guidance tends to skip entirely.
• Accounting for owner-operators and truckers — the fuel, per diem and cross-border wrinkles specific to transport.

Two adjacent hubs cover the rest of the calendar: corporate tax for the T2 and its deadlines, and GST/HST for the sales tax on every invoice you issue.

For the forward-looking side of a contracting business — backlog, working capital per job and bid margin discipline. See fractional CFO support for Surrey construction and logistics companies.