Talent Development Centre

Tag Archives: independent contractors

All Talent Development Centre posts for Canadian IT Contractors relating to independent contractors.

Should You Buy or Lease a Car?

This post first appeared on the CPA4IT Business Resources section on June 22, 2018

Is it better to buy a car under your name personally, or through a corporation? And is it better to lease – or borrow money to acquire a vehicle?

These are the two most common questions we hear all the time when it comes to buying a car.

Questions to Consider

Should You Buy or Lease a Car?

First, let’s address the question about whether it’s best to lease or buy. While most people believe this to be an accounting question, there are other factors that have a greater impact on your decision. For example:

  • Do you want a brand new car or would you be a happy with a car that is a few years old?
  • What are the current finance and lease rates?
  • How many kilometres will you drive?
  • Are you the type of person that will drive the same car for 12 years – or do you want a new car every few years?

These are the questions that ultimately affect your decision.

Tax Deduction

There are 2 methods for calculating the automobile expense: 1) mileage – and 2) actual expenses. In most situations the mileage nets a higher deduction. If you use the mileage rate, the deduction is the exact same whether you lease or buy. However, if you have an expensive lease – or simply don’t drive much – then using actual expenses may result in a greater deduction. So let’s evaluate the differences in deductions when using the actual method.

With leases you can deduct the total amount of the lease – up to a maximum of $800 a month (assuming you are Toronto-based as an example). With a purchase, you can deduct a percentage of the purchase price of the vehicle each year due to the vehicle’s depreciation in value. The maximum amount that can be depreciated for a passenger vehicle is $30,000. The vehicle can be depreciated at a rate of 15% in the first year, and 30% of the remaining balance for each subsequent year. While there is a difference between these two methods the bottom line savings is marginal.

If you’re going to buy or lease a car, we usually recommend that you do so under your own name and have your corporation reimburse you for its use of the vehicle. On the other hand, if the car is under a company name – and you use the car personally – you must reimburse the company for your personal use percentage of expenses, or take a taxable benefit into your personal income. You’ll also need to calculate a gain or loss when you sell the vehicle: this means more paperwork for your accountant and higher accounting fees for you. One of the great benefits of a corporation is limited liability. However, if your assets are owned by the corporation, you’ve limited the liability to all of your assets – which defeats the purpose.

When you’re making major life decisions such as purchasing or leasing a vehicle, we highly recommend you speak with your accountant to ensure you’re making the best decision. If you have any questions about automobile expenses – or are considering the lease or purchase of a new car – please feel free to contact us directly so we can discuss your particular situation, and assist you in making the right decision – for you.

Job Search for the IT Contractor

Searching for an IT job in a competitive job market is never easy. You need to understand your target companies, including those that are looking for technology professionals, what skills they specifically need and their projects. You also need to ensure you have a solid understanding of yourself, what kind of work you want, and how that will affect your job search.

A common misconception among new IT contractors is that a job search is a job search. As long as you keep submitting your resume to different job postings and show up at interviews, you’ll eventually get a job. To an extent, that’s true. But when you go from being a permanent employee to an IT contractor working on your own, there are changes you can make to your job search process that will significantly improve your chances of keeping a steady stream of work. Specifically:

  1. The Places You Look for Jobs,
  2. The Way You Communicate; and,
  3. Your Business Mindset (because you’re now running a business)!

Check out this video for more details…

Are Word and Excel Really That Great for an Independent Contractor’s Accounting?

At its core, Microsoft Office offers a suite of tools that nearly everybody uses, regardless of their profession, with Word and Excel being the most popular. Over the years we’ve provided extensive tips on formatting your resume in Microsoft Word and shared several posts with tips to use Excel to its maximum potential.

Throughout our many posts, we have suggested a time or two that IT contractors could use Microsoft Excel for accounting; however, that suggestion always comes with a caution that as powerful as it is, Excel doesn’t easily cover all of your accounting needs. In a recent blog post, Freshbooks also cautions against using Word and Excel to manage your books, even if it’s something that’s always worked for you. While we admit, Freshbooks is a biased source given its product is accounting software, they do make valid points to consider:

You’re Probably Making Mistakes in Word and Excel

Because these Microsoft tools are not created specifically for accounting, Freshbooks argues that it is easier to make mistakes that cost you time and money. For example, fixing small formatting issues in Excel is quick, but frequently making those fixes will quickly take more and more time. Or, maybe you accidentally save over (or forget to save) IT project estimates you create in Word. Then you may have to unprofessionally ask your recruiter or client to send it back to you a month later.

Tracking Cashflow Is Not as Easy

The example Freshbooks provides in their argument is that their product allows for online payment so you can get paid faster, even in a mail stoppage. But a great accounting program will help your cashflow beyond that example in ways that Excel and Word will not do as easily. If you juggle multiple clients and staffing agencies, accounting programs can track their payment status and trends to know who is better at paying. In addition, they will notify you who has yet to pay, automatically send reminders and notify you when it’s time to follow up. If you’re a pro with MS Office, you can probably set these features up on your own, but they will not run quite as smoothly.

Tax Time is Not as Easy

All independent contractors are well aware of the importance of filing your taxes properly. While your fantastic accountant takes care of everything at tax time, they will be thrilled to learn you moved away from Microsoft Office and onto an accounting software. These programs track your expenses and help manage all documentation that come with them. They can also automatically generate reports and calculations based on your tax requirements. The easier you can make tax time on your accountant, the less time it will take them to do your books, and the less they will have to charge you.

The software you choose to use to manage your IT contracting business is a decision to be made based on consultation with your accountant, in combination with your own knowledge of accounting. While this post was inspired by a Freshbooks article, there are many other options and we encourage you to explore them all. One thing is certain, though. If you choose to use programs such as Word or Excel, you will have more inconveniences and mistakes.

Give Thanks for Your Job Interviews

Happy Thanksgiving! Among the delicious food and valuable time with family, Thanksgiving is especially about taking time out of your busy schedule and being thankful for everything you have. Very often, as we have these discussions, we recognize that being grateful and giving a simple “thank you” can go a long way in building relationships. This holds true when building relationships with clients and recruiters after a job interview.

A few years ago, The Ladders interviewed 500 job seekers and hiring managers to learn more about how people say thank you, as well as how it’s received. While job seekers vary in their strategies, one thing is for certain, hiring managers definitely consider thank-you notes during their decision-making process.

When to Send Thank You Notes After Interview

What to Do When You Lose Out on a Contract

The nature of IT contracting means that throughout your profession, you’re going to inevitably experience rejection. It’s not uncommon to work closely with a recruiter and meet with clients in an extensive interview process, only to find out you didn’t win the work. Especially for those new to the technology contracting space, this can be disheartening and discouraging. Those who have been around the block a few times know that how you react to such rejection plays a role in how your career will shape out. Here are a few things to do when you don’t win the contract you were hoping to get:

  1. Confirm the Opportunity is Closed. Let’s take a step back. Do you know for sure that you didn’t get the job or are you assuming so because you haven’t heard anything recently. Some clients, especially in the public sector, have a long evaluation process. It’s possible nobody, including your recruiter, has heard anything yet.
  2. Ask Questions. And do it promptly. As soon as you learn that the contract was awarded to somebody else, pick up the phone to your recruiter and start digging into reasons why. Try to get feedback from both the recruiter’s perspective and the client’s. Specific questions could be:
  • Was the contract awarded to someone else? (see #1)
  • What was the decision based on? (provide examples to help pry for details — price, qualifications, fit, etc.)
  • How can I improve for future opportunities? (interview performance, qualifications or training, soft skills)
  • What was the one thing I did best?
  • Are there any other open roles I’d be better suited for?
  1. Review Your References. You may get a signal based on your recruiter’s feedback that your references weren’t as shining as you’d hoped. In this case, review the names you’re providing and ensure that you are clear on the information they’re sharing with recruiters and clients.
  2. Self-Reflect. Take the feedback you receive and combine it with what you already know (practice self-awareness and be honest with yourself). Could you have been better prepared? Are you applying to jobs out of your league? Could you have been more personable?
  3. Act on the Results. It’s one thing to know what you must do but it’s another thing to actually do it. Using the feedback you receive, read through your resume, social networks and personal website to make improvements. Also review your skills and create a training plan based on gaps.
  4. Continue to Build Relationships. Just because your recruiter wasn’t able to help you land this contract, it doesn’t mean they will not have opportunities in the future. Keep working with them (and others) and ensure lines of communication remain open to build relationships and find new opportunities.
  5. Stay Positive. Negativity is a downward spiral that brings nothing productive. The right attitude is crucial in a successful job search and the opposite will quickly spread and make people much less likely to want to work with you.

Whatever your reaction to a lost contract opportunity, never burn bridges. This can happen much more easily than you might think. Letting pride get in the way, refusing any responsibility and blaming the recruiter, or pushing to change a final decision can all affect how willing your staffing agency is to present you for an opportunity in the future.

How do you deal with lost contract opportunities? Do you have a specific process, do you ignore them all together, or do react based on each situation? We’d love to hear your feedback and experiences. Please share them in the comments below.

Do These 5 Things Before You Even Apply to Your Next IT Contract

If your job search strategy consists of throwing spaghetti at the wall to see what sticks… and very little is sticking, then it’s time to re-vamp your way of thinking. Applying to multiple jobs with little thought or preparation is not just aggravating to recruiters but you’re wasting your own time as well. Rather than taking an “Apply and Pray” approach to finding your next gig, take a step back and review these five items Dice suggests an IT professional should do before applying to their next freelance opportunity:

Build Up an Online Reputation

Believe it or not, Recruiters have access to the Internet. And they know how to use it. Yes, an Internet-based job like a Web Designer should have a portfolio, but those seeking offline jobs also need an online presence. Recruiters always look beyond a resume to learn what others think of you and if it matches what you say in your resume. When you consciously build up your online reputation, you control the narrative!

Create a List of Verifiable References

The keyword here is verifiable. IT contractors have a different challenge finding great references compared to those in permanent positions. You don’t have the luxury of a long-term relationship with a manager who will remain at their company for a number of years. Instead, your top references could be other contractors who move around and lack the fancy title. You’re also in an industry where the landscape changes fast, so that valuable reference from five years ago may not be able to speak to your skills on a newer technology. When you build a relationship with a credible professional, add them to an on-going list of potential references. Organize that list based on experience and maintain it to keep it up-to-date with current contact information.

Make Sure Your Expectations Align with Reality

In this section, Dice suggests doing some homework to get a solid understanding of the workload, deadline structure and pay to ensure it matches your own needs. This may require a phone call to the recruiter working on the role, but your 5 minute discussion will be well worth your time compared to the hours you spend customizing your resume. Another piece of reality to align is whether or not you are the right fit for the job. In this article we found on The Muse, the author suggests you ask yourself not just if your skills match those requested, but also if your goals match the position and if the client’s culture and workspace fit with your ideal working conditions.

Research the Client

When you work through a recruiter, you have two clients — the staffing agency and the end client — and it’s wise to research both. First, always know what you’re up against before you start working with any recruiter. There are many criteria on which to evaluate an employment agency and how you weigh each one is your personal choice. What’s important is that you’re working with a recruiter you trust. Knowing the end-client is equally as important. For example, if they’re on the list of tech companies most likely to cause burnout or if they have a terrible reputation in how they treat independent contractors, then the higher rate may not be worth your pain.

Understand the Hiring Standards

Finally, Dice warns freelancers that they should not to assume that hiring standards are more relaxed for independent contractors versus full-time employees. A quick contract does not mean your recruiter or client will skip due diligence. Expect that they will conduct detailed reference checks, run background checks, and hold you under a magnifying glass before extending that final contract offer.

What kind of job seeker are you? Do you take similar steps before sending your resume (if so we’d love to hear them) or do you apply for everything that looks like it could be interesting (if so, we’d love to hear if it’s successful). Regardless, share your comments below!

Contractor Quick Poll: Would you ever go back to being an employee?

There are so many great benefits to being an independent contractor in the IT space. You get to set your own hours, work on projects you love, be your own boss, and take advantage of tax incentives. But let’s face it, independent contracting is not for everyone. Some technology professionals prefer not to live in the risk of hoping they have work next year or managing the extra expenses that come with the position.

In over 20 years of working with independent contractors across Canada, we’ve worked with thousands of IT workers as they made the change from a permanent position as an employee to independent contracting. Some of them absolutely loved it while others realized it wasn’t for them. In this month’s contractor quick poll, we’re asking IT contractors how they currently feel about their career decision.

The Game of Life, Freelancer Edition

Life is a journey, not a destination” — words once spoken by American poet and philosopher Ralph Waldo Emerson, and then sang again by Aerosmith in their song Amazing. It’s definitely a journey — a long, unpredictable, sometimes-good-sometimes-bad journey, and independent contractors are not immune to the volatility.

The classic board game “The Game of Life” makes light of the ups and downs of the average life and how single decisions can impact your future, but Freshbooks felt it still doesn’t portray the life of a freelancer so they created this fun infographic. Sure, there are only 23 steps compared to the thousands you’ll have to take in your career, but it still gives an accurate depiction of independent contracting at a high level that’s easy to understand. If you’re exploring a career as an independent IT consultant, then get started by reviewing this infographic and to see what you’re in for.

Obtaining a Federal Government Personnel Security Screening

All companies and organizations perform some sort of background check on employees and independent contractors before hiring them, but the extent of the check will vary. One organization in Canada known for its checks is the Federal Government, which requires nearly everybody who works with its information or assets to go through a degree of security screening. For IT professionals new to the government, this can be a long, intense and confusing process.

Types of Federal Government Security Screenings

As mentioned, nearly every individual who works for the feds will require some sort of security screening. There are a number of types and levels of screens. The one you will require depends on your role, project and information you’re accessing, but it will typically be one of the following 3:

  • Reliability Status (valid for 10 years and required when accessing Protected A, B or C information, assets or work sites)
  • Secret Clearance (valid for 10 years and required when accessing information classified as Secret)
  • Top Secret Clearance (valid for 5 years and required when accessing information classified as Top Secret)

The Federal Government Security Clearance Process

A federal government security screening should begin as soon as you become employed with a company or organization that will require access to protected or classified information. In theory, for independent contractors, that would be as soon as you start working for your own independent business, and your business should be the organization initiating the clearance through its own organization security clearance. However, due to various process and efficiency concerns, independent contractors will often obtain their personnel clearance through a Recruitment Agency, who will start the process as soon as they verify that you’re a potential fit for government contracts.

The complete screening process and all the requirements are extensive and you can find all of the information here. Reliability Status can take as little as 2 weeks where a Secret or Top Secret clearance is usually a minimum of 6 months and up to 2 years or longer. The length of time depends on the history of you and your immediate family, including the countries in which you lived and/or worked. More specifically, the screening will require:

  • Background checks (5-years for Reliability status and 10-years for Secret or Top Secret clearance)
  • Background checks of your immediate family (Secret and Top Secret clearances)
  • Law enforcement inquiry through the RCMP (fingerprinting)
  • Credit check
  • Loyalty check conducted by CSIS (Secret and Top Secret)
  • Passport photos (Top Secret)

Depending on your history, you may also be required to complete out-of-country verifications, interviews, and provide supporting documents.

Federal Government security screenings are owned by the organization who completed the screening. For example, if you received your clearance through your recruitment agency, it’s your agency who holds it. This also means that they have the ability to terminate your clearance when you no longer work with them. To be safe, many recruiters will ask you to complete a form to duplicate your clearance, meaning their agency will also hold your clearance. This way, if your first agency terminates your Reliability Status or Security Screening for any reason, it will still be valid and active through the second agency.

There’s no doubt that Federal Government Security Screenings can often be complex, confusing and frustrating. The best advice for getting through it is to remain as detail-oriented as possible, be prepared, and work with the Company Security Officer who is helping you obtain it. For more information, you can also visit https://www.canada.ca/en/services/defence/nationalsecurity/screening.html.

A Surgeon Teaches Us How to be Super Human

One of the top reasons clients hire independent contractors is because they’re the best in the field. When an organization needs something developed in a specific way, they find an expert IT contractor with a niche skill set. That contractor will not only deliver the solution most efficiently, they will also transfer knowledge and provide more in-depth knowledge to the client’s IT department. It’s safe to say, if you want to improve at any skills, it’s best to ask an expert and those with the most experience.

With that said, we can all learn something from doctors and surgeons. Before you get concerned that this post is advocating learning about medicine and performing surgery through a video, we’re referring to another skill that all successful medical professionals have proven to be experts at: productivity.

In this video, plastic surgeon Dr. Jay of Med School Insiders provides some of his own productivity and efficiency tips that have allowed to get through med school, continue a successful career and still balance a fun life. Watch the video to learn how you can maximize your time efficiency and start getting more done today!