Accounting for incorporated contractors and trades

An incorporated contractor is not just a small company that happens to swing a hammer or write code. The tax questions are genuinely different. Whether CRA sees a real business or a disguised employee changes the tax rate on everything. Paying a subcontractor triggers reporting obligations a retailer never encounters. Equipment, trucks and tools dominate the balance sheet. And because the work is often billed per project, cash arrives in lumps that have to fund remittances timed to the calendar instead.

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.
• Catch-up bookkeeping — 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.