The novel Coronavirus has resulted in new layoffs every day. Many people are using their skills and talents to do cash jobs for friends and family. If you’ve been laid off due to COVID-19, or you’re on temporary leave from your fulltime job, and you are getting paid for a side job, we’re here to help you and to tell you to be careful!
There are some risks associated with completing side jobs for cash. Many people have no idea that they could (and should) register as a business. Here are some things to consider when if you earn income from a cash job.
Registering Your Side Job Actually Provides You With Protection, an Easier Tax Season AND Access to Funding
We see many people who begin working for cash as a side job and have no idea that they should register as a business. Simply speaking, if you provide a service to another person or party for payment, you are completing a business transaction. It is quite common for people to engage in cash sale jobs and not consider themselves a contractor or a business owner.
The idea of registering your business may seem intimidating because often our initial thought is, “well I don’t want to start up a business and fail”. Starting up a business is not what it used to be 10, or even 5 years ago. You can easily register your “side job” as a business online, and here’s how. The only things that will change include access to more protection, small business loans and grants and a much easier tax season.
Is Your Side Job Considered an Essential Service during the COVID-19 Pandemic?
Check out this article to find a list of jobs each province considers to be essential during the COVID-19 pandemic. These jobs include cleaning services, electricians and plumbers, mechanics, and so on. These types of jobs are very common for people to perform for cash, and can definitely be registered as a business.
What Happens If I Don’t Register My Side Job?
The most important reason to consider yourself contractor and register as a business is that it provides you with protection and liability.
If you complete several jobs for cash, there is no guarantee of getting paid the correct amount or getting paid on time. If you do not have any contracts or legally binding agreements with your clients (and yes, they are clients if you profit from the work you complete for them) you don’t have a leg to stand on, and essentially you have no way to protect yourself.
Most contractors start out doing cash jobs “every now and then” and before they know it, their work is being requested on a full time basis.
If this is you, KUDOS! Even if this isn’t something you planned for, it is something to be proud of.
As you become more successful you must learn how to properly calculate and collect your sales tax. This is a challenge for all first time business owners. The best thing you can do to prepare yourself is to keep track of all of your paperwork. Click here to download our free guide to help you get organized and learn where and how to save money before you register your business!
If your work requires you to drive long distances and use a lot of fuel, or to purchase any supplies or tools, you are paying for these out of your own pocket. If your business is not registered you can’t write these types of expenses off. This mileage log will help you keep track of exactly how much you can write off. You can include this along with your receipts and other paperwork when you file your taxes.
Hiring additional people can quickly turn into a legal issue.
If you eventually need help hire people to work for you, it can be very confusing for you to properly pay them and ensure their health and safety while on the job. This can turn into a liability issue if you aren’t careful. If you are already at a point where you are considering hiring some help and you’re wondering whether it is better to hire an employee or a contractor, click here to read our blog Is It Better to Hire an Employee Or a Contractor?
Why should I register my work as a business?
Registering will not only make your life easier with things like taxes, expenses, liability and protection, but it will also provide you with some added bonuses such as the possibility for loans and funding, and a future successful career for something that you thought was a simple side gig.
If you register as a business you can write off a large portion of your work expenses on your taxes. Also, depending on the type of work you do, trade associations can offer you some protection and support if you don’t get paid correctly, or get sued. You also may be eligible for a small business loan or grant. Each province has its’ own small business programs that offer funding and support. For example, if you’re in Alberta, ATB and BDC can help you find out what you are eligible for, and what steps to take to get a small business loan or grant.
Registering your side job as a business will bring you more benefits than you ever imagined. We are here to help you! If you’re ready to register your side job, click here and we will walk you through all the steps to start a business the right way.