BEING A SELF-EMPLOYED PERSON OR AN INDEPENDENT WORKER
by ACTMD's team
Please note that the amounts entered in this document are only as examples and may vary yearly. This document was produced in 2010.
For fiscal purposes, a self-employed person is an individual who, under a verbal or written agreement, undertakes to provide a service or perform a task for a client in exchange for an agreed amount. Such an individual may also own a business or be a commission salesperson. The relationship between the person who provides work and a self-employed person is not one of subordination, as in the case of an employer.
As a rule, self-employed persons cover their own work-related expenses; assume the financial risks associated with their work; provide their own tools or equipment, but are not obliged to perform the work themselves; may hire employees or other self-employed persons to do the job; may determine the location at which the work is to be carried out and the hours of work. In other words, they are independent of their clients.
For more information about self-employed persons consult:
It is important to determine the correct status
Workers who consider themselves to be self-employed or are considered self-employed by a work provider may nonetheless be considered employees according to our criteria. Employers sometimes encourage certain employees to become self-employed. However, the fact that both parties are in favour of this change does not mean we will consider the worker to be self-employed. Revenue Quebec may, in the course of an audit, assess the situation and conclude that a worker identified as a self-employed person is actually an employee. The employer will then have to pay the employer contributions that should have been remitted.
If the employer (payer) considers an individual as an independent worker then the individual is in reality an employee; the employer will have to pay both parts of the dues to Employment Insurance and to CPP/QPP and this, for the duration of employment. Penalties and interests may also be imposed. Further, the worker will have to re-do his income tax report and to pay the income tax that the employer should have taken from his pay. Interests and penalties could also be imposed. It is then very important to thoroughly determine the nature of the work relationship.
Registering your enterprise
In Quebec, the majority of enterprises are required, upon their founding, to register under one of the various possible legal forms. There are many legal forms of enterprise. Sole trading concern is the oldest form of commercial organization. Sole means one person. The person who conducts the business is called 'sole trader or sole proprietor' which is owned and run by one individual and where there is no legal distinction between the owner and the business. All profits and all losses accrue to the owner (subject to taxation specific to the business). All assets of the business are owned by the proprietor and all debts of the business are the proprietors'. This means that the owner has no lesser liability than if he was acting as individual instead of a business
Who is required to register?
Individuals operating a sole proprietorship in Quebec under a name that does not include their first and last names are required to register to the Quebec enterprise registrar within 60 days after beginning its operations.
Individuals operating a sole proprietorship under their first and last names are not required to register. However, note that an enterprise may register voluntarily in order to publicize its existence. It then has the same rights and obligations as any enterprise legally required to register.
Legal obligations stemming from registration
Enterprises registered in the enterprise register must update their registration information every year by producing an Annual Declaration. However, enterprises eligible to file the income tax return and the information return for the enterprise register together, sole proprietorships and legal persons, may file both returns in one simple operation.
Annual Declaration of Registration fee
The annual registration fee for sole proprietorship is payable with the Annual Declaration.
To obtain more information consult: