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# Error in QuickBooks Blog – “Barbers or Hairdressers” EI Premium guidance.

Please correct me if I am mistaken, but I am trying to understand CRA Special EI Regulation for Barbers and Hairdresser. QuickBooks Blog provides some guidance with this calculation however I believe it is incorrect and is misguiding business owners. Given the Blog is using 2017 figures, my examples will contain the same.

What You Need to Know About Employing Barbers and Hairdressers >

Self-Employed Barbers or Hairdressers >

At the time of posting this discussion it is written as such:

“… If you don’t have those numbers, multiply the number of days worked that week times 1/390 of the maximum annual insurable earnings. Then, multiply the total by 1/78. Let’s say a self-employed barber works five days in 2017, and that year the maximum pensionable earnings is \$55,300. In this instance, your calculation looks like the following: 5 * \$51,300 * 1/390 * 1/78 = \$8.43. That’s the EI payment for the week”

CRA Explanation:

“… 2. If the owner or operator of the establishment does not know how much the barber or hairdresser earned and/or the amount of the expenses incurred in generating those earnings, the amount of the barber or hairdresser’s insurable earnings for each week during that employment is deemed by the IECPR to be the lesser of:

-the number of days worked in that week multiplied by 1/390 of the maximum of the yearly insurable earnings; and

-1/78 of the maximum yearly insurable earnings.”

Problem: The method of calculation on QuickBooks Blog is very different than my interpretation of CRA. CRA states for the method calculate the LESSER of:

“-the number of days worked in that week multiplied by 1/390 of the maximum of the yearly insurable earnings; and

-1/78 of the maximum yearly insurable earnings.”

Therefore using QuickBooks Blog example, “5 * (\$51,300 / 390) = Insurable earning of \$657.69 for the week, OR \$51,300 / 78 = Insurable earning of \$657.69 for the week. In that example they are only equal because the self-employed barber worked five days (full-time). The LESSER of those two calculations would be subject to payment of BOTH the Employee (1.63% in 2017) and Employer (1.4 x) EI Premiums. The result is a Combined EI Premium of \$25.73 (\$10.72 + \$15.01).

This is very different than “5 * \$51,300 * 1/390 * 1/78 = \$8.43” as identified on QuickBooks Blog.

Have I misinterpreted CRA’s instruction?

Thanks!

QuickBooks Team

## Error in QuickBooks Blog – “Barbers or Hairdressers” EI Premium guidance.

Hello AndrePullMyHairOut,

Thanks for reaching out to us here.  As a self-employed individual, it's essential that you're able to calculate your net profit accurately.  I would be happy to provide more information, so you're on the right track with your QuickBooks goals!

I suggest using the Self-employment tax deduction calculator to explore tailored tax write-offs, for a better understanding of self-employment deductions.

If you have any additional questions or concerns. I recommend reaching out to the CRA, or connect with an accounting professional.  If you don't have an accountant, we can help you locate a ProAdvisor in your local area.

Feel free to reach back out if you have any other questions.  We would be happy to help!

Level 1

## Error in QuickBooks Blog – “Barbers or Hairdressers” EI Premium guidance.

Hi Trish, thanks for the link however it doesn't help the issue at hand.

The Self-employment tax deduction calculator has USA Hairdresser and Barber industry. However the Canadian version of the calculator does not: https://turbotax.intuit.ca/tax-resources/self-employed-expenses-calculator.jsp

Many salon operators come looking for direction through QuickBooks Community discussions and QuickBooks Blog. I think it's reasonable for QuickBooks to revise the 2017 article which is misinforming salon operators how CRA's Special EI Regulation for Barbers and Hairdressers is calculated. At 2024 rates, a salon operator using that method of calculation would annually remit approx. \$540 EI Premiums per Chair Renter, instead of the required approx. \$1,679. This would result in an underpayment \$1,138 per Chair, or in a 5-Chair salon that would result in an annual underpayment of \$5,692! It's worth correcting the Blog.

Cheers!

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