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Working from home: transition to the self-employed PQS
Working from home:
transition to the self-employed PQS
Working 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
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
can be extremely difficult . Working for
Architects can mean you will not get paid until they have been paid by their client . Expect three to five months from billing to receiving payment .
Institutional and Municipal clients usually pay within one month .
• Be aware of the market fee structure
and going rates . With a low overhead cost, you already have a big advantage over the larger companies . There is a price point for estimates and services that seems acceptable in the marketplace .
Working on an hourly rate might seem attractive, but lump sum fees for work are where the profits are made • Build resource relationships with other independent QSs or other qualified individuals to sub-contract for take-off, and specialist estimating like mechanical, electrical, earthwork, civil, scheduling,
VA, etc . You will need to include these in your proposals so that you show you have a resource base, and are not just one person . It is feasible to take on a major project with only a few qualified, experienced individuals, as long as you have an organized work plan and can deliver a quality product . • Avoid a partnership . I was given this advice a long time ago and I think it is
still a sound statement . Partnerships often end with big problems and usually over money . Working on your own will usually mean some long hours and require significant effort, but the reward goes directly into your own pocket . Be disciplined, establish specific work hours, and routines . I have found being selfemployed has brought much satisfaction along with the freedom of being my own boss . With world inter-connectivity, it does not matter that you are conducting business, or a Zoom meeting, from a far-off land .
About the author
James (Jim) Bush, PQS, founded JBA Ltd in 1994 and has specialized in providing first-class professional cost consulting services over the last 26 years . Previous employment includes almost a decade with a national QS firm where he led project teams on major projects throughout Canada and overseas . Originally qualified as a PAQS in New Zealand, Jim has 45 years’ experience in the QS field, the last 26 years being self-employed .
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