tips for contract flying
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spool up time
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tips for contract flying
Embarking on my first contract gig. It's seasonal and it's in canada. Looking for advice on how to handle the finance side of things. Heard the suggestion that a pilot should start up a numbered company and pay yourself as an employee of that numbered company and utilizing all expenses deductible by ccra. trying to find best option. thanks in advance.
Re: tips for contract flying
How long do you expect to do contract work?
My first pilot job was contracted, however it would have been more of a headache to set up a company than what it was worth. I did not plan to stay contracted for an extended period of time. Also, at a point fresh out of school, there were not a lot of deductions I had to make, nor was I spending a lot to remain contracted. If this is your case, I think the benefits of a numbered company for tax purposes is not worth the troubles, and may not even be a savings in the end for short periods.
If you are looking to do this for years however, you should be looking into setting up a company for yourself. That way, you and your possessions are protected should anything happen along the terms of lawsuits. I would recommend creating a company if you know what you are doing and can do it on your own, otherwise the cost to hire someone for this purpose may outweigh any financial savings by being able to write off some pens and paper every once in a while. Most of the costs you incur are deductible without requiring a company anyway. In addition, you will have to hire someone else to your company on paper, I believe you require a separate person for treasury.
My recommendation would be, unless you will be contracted for at least 10 years, you can do the paperwork alone and have someone else you can "hire", don't bother with it.
My first pilot job was contracted, however it would have been more of a headache to set up a company than what it was worth. I did not plan to stay contracted for an extended period of time. Also, at a point fresh out of school, there were not a lot of deductions I had to make, nor was I spending a lot to remain contracted. If this is your case, I think the benefits of a numbered company for tax purposes is not worth the troubles, and may not even be a savings in the end for short periods.
If you are looking to do this for years however, you should be looking into setting up a company for yourself. That way, you and your possessions are protected should anything happen along the terms of lawsuits. I would recommend creating a company if you know what you are doing and can do it on your own, otherwise the cost to hire someone for this purpose may outweigh any financial savings by being able to write off some pens and paper every once in a while. Most of the costs you incur are deductible without requiring a company anyway. In addition, you will have to hire someone else to your company on paper, I believe you require a separate person for treasury.
My recommendation would be, unless you will be contracted for at least 10 years, you can do the paperwork alone and have someone else you can "hire", don't bother with it.
Re: tips for contract flying
The tax laws in this country are written for companies, not employees. If you're going to collect more than $50k in a year;
Incorporate, get an HST/GST number (required if you will receive more than $35k/yr), signup for low-cost web based accounting (www.kashoo.com), get a credit card just for your company expenses, invoice your clients.
Use your company card to pay for expenses you incur to run your business. Do you travel to the airport by car? Pay for gas? Park? Eat lunch or Dinner? Buy a uniform? New Headset? Magazine Subscription? Use a cell phone for work?
Pay for all these things via your company, BEFORE any income/corporate taxes are paid. Remember, your company has the right to spend its money on whatever it wants.
Go find an accountant, get him/her to help you understand how to best pay yourself to minimize income taxes. Sometimes its best to pay yourself like an employee, but then there's payroll deductions to worry about (ei, cpp, wcb, etc)m sometimes it best to pay yourself in dividends. There's some creative ways to pay yourself in the first couple of years as well.
Hope that helps.
Incorporate, get an HST/GST number (required if you will receive more than $35k/yr), signup for low-cost web based accounting (www.kashoo.com), get a credit card just for your company expenses, invoice your clients.
Use your company card to pay for expenses you incur to run your business. Do you travel to the airport by car? Pay for gas? Park? Eat lunch or Dinner? Buy a uniform? New Headset? Magazine Subscription? Use a cell phone for work?
Pay for all these things via your company, BEFORE any income/corporate taxes are paid. Remember, your company has the right to spend its money on whatever it wants.
Go find an accountant, get him/her to help you understand how to best pay yourself to minimize income taxes. Sometimes its best to pay yourself like an employee, but then there's payroll deductions to worry about (ei, cpp, wcb, etc)m sometimes it best to pay yourself in dividends. There's some creative ways to pay yourself in the first couple of years as well.
Hope that helps.
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My Whiskey girl
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Re: tips for contract flying
in the past I have used an incorporated company and found a lot of hassle. You will need to use a registered accountant to do your taxes. If you do use an incorporated company, it can protect you personally if there are problems and there are many tax benefits too. What I have used lately is just getting paid a daily rate as a contract employee through the company in question and have them take all the deductions. There are still tax benefits available, but you have to make sure the company will sign the necessary paperwork first. There is definitely less hassle this way and you don't have to worry about running a small business.
