Working from home:
transition to the self-employed PQS
W
orking from home has recently become a new way of life for a large portion of the workforce due to the COVID-19 pandemic. The question often comes up, “What if I became my own boss and transition to a self-employed PQS?” Startup will require cash reserves for the first two to three months while you get yourself into operation. Besides setting up dedicated office space, you will need a company name, logo, website, email address, phone number, business cards, a company profile with your resume, and a business bank account. Your office should be fully equipped with a dual-screen computer, a laptop, and a large-format colour laser printer. Get the word out, make cold calls, and work your contacts for opportunities. Scan construction publications like Construction News and BC Bid for leads. Keep your contacts informed of what you are doing and what you can offer. There is the ethical issue about leaving your employment that needs to be handled correctly. Your employment contract will have specific terms and conditions. In short you leave with nothing. There will also be strict terms about your employers’ and clients’ intellectual property, to which you are not entitled. The following outlines some of the regulatory requirements and business practices to consider for operation as a self-employed entity. • Incorporate as a limited company. Besides benefits for small business write-offs and taxes, this allows you to pay yourself a salary and continue
to contribute to the CPP. Many of your personal expenses can be claimed for the business (charging rent for your office, mileage on your car, etc.). • Register with the CRA as a business and get a business tax number. You are now responsible to collect and remit GST, pay payroll tax (CPP and payroll tax withheld each pay cheque) and eventually pay Corporate Tax installments. The CRA is relentless in collecting on time and will issue late payment penalties and charge interest. • Obtain the services of a CGA accountant. An accountant will set up the business account structure in a software package like Quickbooks. This allows you to infill the data and book entries throughout the year. You issue monthly invoices to clients, receive cheques, deposit the cheques, make payroll payments, expense payments, CRA payments, and record these directly into the software package. The accountant prepares and files the year-end statements with the CRA using the book information that you prepared throughout the year. • Obtain errors and omissions liability insurance for minimum of $2 million. All government and some private clients (such as Architects) require this coverage be in place. Be prepared to pay an annual premium of $5,000 to $10,000. • Obtain commercial general liability insurance coverage in the same $2 million range. • Register with Worksafe (Workers Compensation Board) and make sure
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you have the appropriate classification rate. It requires a small premium each year, but it is the law and the penalties for ignoring to register and pay can be extreme. • Obtain business licenses. They are required not only in the municipality in which you reside, but generally in other municipalities in which you work. Proof of license is often required before starting work. • Maintain your CIQS membership and all your other professional designations. These are required for your E&O Insurance and some clients stipulate a PQS only to work on their projects. Continue with expanding education and qualifications (CPD). Maybe, consider offering a specialty service. • Make sure all software is properly licensed. Maintain software subscriptions. Backup all client data and ensure that your web access is secured with proper firewalls and anti-virus/malware scans. • Obtain disability insurance. In the event of accident or illness and you are not able to work, it will cover a portion of your monthly costs. Life Insurance and a medical benefits package could also be considered. • Understand your cashflow. The cycle of executing the work, sending the bill for the work, and receiving payment for the work, can take an average of two to three months. This can cause cashflow problems if not considered in conjunction with your outgoings. Having a couple of months outgoings in savings can cover operations during a quiet time. Getting paid in a timely manner To return to Table of Contents CLICK HERE
