Day 9 – Operations: Taxation, HR Plans, Mentors, Employee vs. Contractor

It’s a terrific Tuesday on the 9th Day of our Bella Coola Aboriginal BEST journey. It takes almost three full days to effectively cover Sessions 5 and 6 of the Aboriginal BEST training manual… learning all about managing day-to-day business operations.

CCAE facilitator Kristin Kozuback says, “Operations is all about setting up systems up for success… taking care of the daily administrative and accounting details that could trip you up if you ignore them. The goal is to get systems in place now so you can focus on doing what you love more of the time.”

Session 5 and 6 Aboriginal BEST

CCAE instructor Chris Rand paints the big picture for students. “From the HR (Human Resource) and accounting perspectives, it’s important to know when businesses must charge (or collect) taxes from customers,” he says. “You must know how and when to take deductions off of employee paycheques, then remit those taxes to various government agencies… or when business owners do NOT have to tax people or organizations, as outlined by the Indian Act.”

We place a great deal of emphasis in BEST on encouraging entrepreneurs to look internally at their own skill sets and comfort levels for every aspect of their business (marketing, operations/administration, financials). The goal is to make sure that we build on strengths then fill in any gaps by either:
a) planning to take courses or training in our weaker areas;
b) hiring advisors (or more staff) when necessary, or;
c) working with a mentor.

It is important to know when to bring in a book keeper, accountant, lawyer, media expert, graphic artist, or web designer. Mentors can be excellent guides to help your find suitable people to help you at appropriate times in your business development.

The BEST book is full of details and examples; we also suggest reading through the on-line articles below. These links can help BESTies understand the Canada Revenue Agency’s (CRA) guidelines about justifiable business expenses/deductions, and hiring (or being paid as) an independent contractor or an employee.

The 4-point CRA test looks at these areas of doing business:
1) Tools – who owns the tools/technology you’re using? Is it your computer or machinery (contractor) or theirs (employee)?
2) Control – who determines where you work, who you work with, your daily tasks, and when you work? Contractors usually have the ability to control if they hire others to work with them, their schedule while working on a project, and if they can do some work away from the site/job. Employees don’t usually have that level of control over their own workplace.
3) Chance of profit/loss – Do you have a chance of making – and keeping – a profit from this project? Do you run the risk of paying for lost or broken equipment, oversights, and operating costs? Contractors are more financially involved in making profits… or losing money when costs run over the estimated amount.
4) Integration – How closely are your business activities tied to the operation of the person hiring you? If you only work for one company, and almost everything you do is part of their business functions, you may be categorized as an employee.Revising goals to fit HR and Operations plans

Why does this all matter?

Contractors deduct all reasonable business expenses from their income, take care of their own taxes, buy and use their own tools, profit when things go well, and often have more control over their own workflow and location.
Employers must deduct taxes and pensions (where applicable), provide tool and training for employees, follow Employment Standards Laws, generate T’4s and Records of Employment, keep profits when things go well, and control the workflow and location of workers.

Here’s some of our favourite articles about business operations:
ARE YOU A CONTRACTOR OR AN EMPLOYEE?

CRA’s EXPENSES YOU CAN DEDUCT

A myth-busting article explaining that the majority of Aboriginal Canadians (whether identified ad First Nations, Métis, Inuit, status or non-status Indians) DO pay taxes… First Nations Pay More Tax Than You Think Read the full CBC article HERE