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Understand the difference between employees and independent contractors

SOLVEDby QuickBooks22Updated 7 days ago

Learn the basics about classifying a new worker as an employee or an independent contractor.

Deciding if you can hire someone as an employee or independent contractor is a big decision. It impacts taxes, what you need to do for payroll, and more. The government has a lot of rules around this, but here is a basic overview and some links that may help you.

Employee vs. independent contractor

An employee is a person hired by the employer. The employer generally has more control over an employee. An independent contractor is a self-employed person who provides services to businesses, generally on their own terms.

Use the CRA's guidelines to determine your worker classification.

If your worker is an employee, you must:

  • Withhold income taxes such as federal, provincial, or territorial income tax.
  • Contribute to the employee’s Canada Pension Plan (CPP).
  • Pay Employment Insurance (EI).
  • Issue a T4 after the end of the year.

Set up your workers

Add your new employee to QuickBooks Payroll.

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