# Sub - contracting discussion



## NLshinglerBC (Nov 12, 2011)

Hey all.
I was working hourly for a company for the last year and told my boss id install for 45 a sq and a 1.00 a foot of metal. 55 on steep slope.
so we have been doing this for the past 2-3 months, going fairly well. getting a bit slower now because im haveing trouble keeping a good crew together.
anyhow,
he has been paying me HST ( 1.13%) on all my invoices.
he is asking me to register an HST number and go sole proprietor. . .
should I stop charging him the HST or should I register a HST number?
thanks.


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## Grumpy (Oct 29, 2008)

Either you are a sub contractor or you are an employee. Period. A mixture of the two will almost always come back to bite you and him in the ass. 

I hire sub contractors and employees. When I hire subs, theya re real subs, they have a corporation or LLC and have all their own insurances, vehicles, tools, and equipment. 

When I hire an employee I expect them to have their own basic hand tools. I pay hourly. I reimburse them if they use their vehicle for company purposes. I expect them to have their own basic hand tools, but I will provide the big equipment and vehicles. 

So it comes back to either you are an employee or you are a sub contractor. Sounds like you want to be a sub contractor? Sounds like you had guys working for you, but you are not a corporation? How does that work for taxes?! Were you paying cash? Were you paying their taxes yourself!? I would never ever dare dream of running a business like a roofing business with such liability as a roofing business has as a sole proprietor. Operating a business as a sole proprietor opens your personal assets like your home and your car and your wife's car to law suit. At least a corporation offers some level of "Corporate veil" protections which if you are playing by the rules will protect your personal assets and personal finances. 

So YOU need to decide if you want to be an employee and work for your boss hourly with his insurance etc.. or you need to decide if you want to be a sub, hire guys, withold their taxes, make quarterly tax contributions, cover their insurance etc...


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## roofermann (Jul 7, 2012)

Grumpy, you sir have hit the proverbial nail on the head!


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## NLshinglerBC (Nov 12, 2011)

thanks. 
that's exactly what my concern was about the liability and personal assets at risk through sole-proprietorship. 

I am not sure what approach to take. . I enjoy the freedom much more of having my own job and being my own boss and choosing my own guys to work with. . I have my own truck and hand tools but the guy who "subs" me gives me his compressor and guns and Ladder Hoist to do the jobs with..
i figure im making more money this way then hourly and i am i my own boss and i dont need to deal with all the crackhead roofers that come and go with his hourly crew..
not sure where to go from here - now that he needs me to have an HST number. or business number? maybe i should start an actual company rather than having to go sole-proprietor . 

I was operating as self employed? and if i do have laborers help me i pay them cash but receive receipts and have them pay taxes on it themselves?


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## BamBamm5144 (Jan 2, 2010)

Either be a subcontractor or an employee. Right now you're an employee.


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## KAAL Construction Inc (Oct 1, 2012)

If he is scheduling your work for you and you are using some of his tools and he is telling you how and when he wants the projects done.then in the wonderful eyes of the IRS you may be categorized as an employee and not a true sub contractor. Also I agree 100% that in this business you want to shield yourself from your company as best you can and create a complete separate entity for many reasons.Liability and personal assist being most important. Also make sure you know what your General Liability insurance really covers and that you are in fact covered in the correct manner. I see a whole lot of guys running out and getting the basic "carpenters" insurance with very low premiums that wouldn't cover you for %#$# if you ever needed it.Your either an employee or your a sub contractor.Their is no fine line between them.


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## NLshinglerBC (Nov 12, 2011)

so if im still an employee then i don't need a business number and he can just withhold taxes from my pay and still pay me by the square and i just pay my own employees out of my earnings


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## KAAL Construction Inc (Oct 1, 2012)

Trying to understand this....You are working directly for a contractor,he is taking taxes out of your total earnings and with the balance of that you are paying guys to help you? Pays you $50 a square at 20sq = $1000 - taxes of say 25% = 750.00 net. Out of the net you pay your guys? Are you 1099'ing your help or absorbing those taxes? It all seems more complicated then it has to be really. Make sure dude is actually paying your taxes if he is withholding the money first off.If he is paying you price work and then taking out taxes that in itself seems a bit fishy.


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## vtroofing (Sep 27, 2009)

You are paying your guys in cash. Even if the Contractor is paying taxes on the withholdings on you he is still cheating the man by limiting his pay with holdings to just yourself. And you should not be paying your boys in cash- that will catch up to you and be much worse than small increments along the way. 
Just my opinion you are in BC so rules may be different.


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## Grumpy (Oct 29, 2008)

If you are an employee, you don't have employees. He pays you, he pays them.

If you have employees you are a subcontractor. He pays your company, which you own, and you pay your employees. 


You are in way over your head and *not ready to start a company yet.* There is alot you need to learn about forming and running a business. Tell him to pay you directly and pay the other installers directly. Don't get stuck in the middle. This guy is eventually going to screw you. Educate yourself FAST.


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## John's Roofing (Nov 16, 2011)

Well said Grumpy...You can't have the best of two worlds...The way it looks ...you're not having it the best in either world...


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## NLshinglerBC (Nov 12, 2011)

KAAL construction - no i said clearly he is paying me HST tax on top of my invoice. RE READ FIRST POST. PAYING ME 1.13 on my invoices

re read the post people
i am self employed. sub contracting
being payed by the square
i am paying my own laborers cash and they are writing me reciepts for what i pay them for hours worked.
they are working self-employed as well technically. 

i was just asking if instead of registering a buisiness number i could just stop charging him the TAX on my invoices , but either way i understand now, one of us has to pay in the taxes on what he pays me. hes paying my tax on what he pays me and thats what i have to pay in


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