Contract Guys

[Chachi]

Hey all

 

New to the forum. I've been wrenching for about five years now and I'm starting to toss around going contract. I was just wondering if anyone has any good advice on the subject, tax info, insurance, WCB, rates, that sort of thing.

 

Any help would be much appreciated

[helidude]

If you're thinking of going contract because you think you'll make more money, then forget about it. When you factor all aspects of helicopter maintenance between full time employment and contract, you'll find that you'll probably end up making between 65 to 100k either way. This of course will depend on the company and also the season. Some contract guys make a lot of money but they do so by working their arses off with little time off throughout the year. Don't let high daily or hourly rates convince you that contract is more lucrative. High daily or hourly rates also mean zero income when you're not working. The only thing that really matters in terms of money is what your year end T4 says and that will be pretty similar between contract and full time employemt.

I've worked both contract and full time and found them to be about the same in terms of money. Contract offers you more freedom and full time offers you more stability.

[amodao]

Been there done that, won't do it again.

 

I had my own limited company and contracted myself out and in the end didn't make any more money. If your are contracting to a company as a third party maintenance provider you must provide your own WCB (in every province and territory you are possible going to work in, most require money up front), provide/obtain a GST #, carry liability insurance that meets the requirements of the operators you are working for ($min $17,000 year approx.), and stipulate in your contract all of the what if's (what if I am sick for a day who will cover/pay for the maintenance duties/penalties, who provides special tools, what are your actual responsibility and what are the operators etc. BE SPECIFIC).

 

If you want to contract your self out as an individual, then its the company you are working for responsibility to collect and submit income tax, provide WCB, provide liability insurance, and cover expenses etc. (Basically you are a employee of the company, paid on a day rate basis rather than hourly or monthly/salary).

[rainman]

So I'm curious, would it be the same for pilots and engineers or would one be more lucrative then the other as a contract guy?

I've talked to some pilots who swear by the contract life. Also I guess it would help to have 2 or 3 good contacts out there at other companies to get "in"

Comments??

[Chachi]

Thanks guys, couple questions,

 

If you contract yourself individually, can you write off expenses such as vehicle and home office

 

And are there stipulations that you have to work for more than one company to qualify for the tax breaks?

 

I did some quick calcuations on day rate contract versus full time and actually found them to be fairly similar at the days end, like helidude said, just wondering if the tax breaks bumped it up and over or not?

[amodao]

Expenses owning a company:

Lawyer fees for annual company report

Accountant to do year end fiscal report

 

Problem encountered:

How to determine how you will pay yourself?

As an employee of your company - Which mean you pay both portions of the income tax as well as EI and CPP.

In a form as a share holders loan - Which means you have to claim the money on your personal income tax.

 

Liability Issue:

Talk to a lawyer about personal liability wether you are a pilot or an AME.

In my case as a Limited company which is a seperate legal entity, one Limited company cannot give you a letter saying that they will cover/carry the liability for your company if you are working for them as a sub-contractor. Its just the same as me hiring an overhaul shop to perform 3rd party maintenance on my parts. If there is an incident and it is determined that the 3rd party who overhauled your my part is at fault then my insurance company will go after theirs.

The cost for liability insurance for me was $17000 year and if I was to hire an employee it was an addition $7000.

 

Some Pro's and Con's of having your own company:

Depending on your province you can bill yourself a small portion of your home for a office depending on the square footage of your home. Same goes for the heat, lights, expenses etc.

You can sell your tools for example to the company and write them off through deprectiation to a point. BUT should you ever decide to close your company then you personally have to by the tools back from your own comany and pay a capital gains tax.

You can write off your vehicle for work but be careful, they tax people are very hard on small business owners in regards to vehicle write off's. You have to calculate how much you actually use the vehicle for your business, if you can't justify the costs in relation the the income the company generates you may find yourself looking at a nasty audit.

The BC government requires that your business get income from more than one source although I got around that by signing a 1 year contract with a company were I supplied labour, special tools, vehicle etc for a fixed predetermined price and time period. I have to send a letter with a copy of the contract to them and they gave me the ok for 1 year single source income.

 

I eventually came to the conclusion (after 3 stress filled years) I wanted job security and a steady income and I folded my company. For me it was a good learning experience but in the end I was a happy camper the day I became a full time employee again.

:up: