Ask an Expert
One year IT contact
Expert: Reg Pirie
I expect to soon be granted a 1 year contract as a consultant. Having been in IT for 12 years but only as a full time employee, I don't know the tax implications when working as a consultant. I am told that travel to the job, lunches etc. can be deducted. Can you point me to some URLs that have this kind of advice?
Reg Pirie answered:
"Based on the fact you raised these questions you are likely as conversant about business tax regulations as any typical Canadian - hardly at all! Nor should you be, you are an IT expert and not a tax guru.
One of the first lessons to learn if you opt to become a consultant is to stick to what you know and develop a professional support team to handle matters where you have limited or no expertise. This definitely applies to accounting and legal situations. Take the time now to seek out a qualified accountant who is known for dealing with small business. Ask a few self-employed business associates for some suggestions.
Select a couple of likely prospects, phone the firm and say you might want to do business with them but you would like to drop by for a preliminary chat first. Good accounting firms will not charge for this first meeting and remember, you are in reality interviewing them to determine if they are going to get your business.
During the meeting, don't pose your specific questions but rather, explain your situation and ask if their firm supports new entrepreneurs like yourself. Make certain you know exactly who would be handling your account. You need to be comfortable with the individual because this is going to be a long-term relationship involving something very near and dear to you – your money!
Decide on your accountant and then schedule a formal meeting where you can lay out all your questions. You will find he or she will be concerned about getting you properly organized to deal with a wide range of financial issues including: GST, maybe PST, simplified bookkeeping procedures, business receipt retention, tax installments, deductible expenses, perhaps personal RSP contributions and a host of other items.
Yes you will pay for these services but treat the cost as an investment and not an expense. As your consulting business grows you will find that engaging an accountant from day one will be an extremely prudent decision."
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About the author
Reg has authored several books, including: From Starting to Marketing… YOUR OWN CONSULTING BUSINESS. He is currently writing, guest lecturing and providing consultative marketing support to businesses. See the following Web site for more details about all his books and lectures.
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