So you want to become a full-time contractor
Can you just pick up your tools and go for it?
– By Bob Assadourian, Master Contractor
After years in the corporate world, and always having a
knack and passion for renovations, Joel decided to change his
career path and become a full-time contractor and renovator.
Homeowners who are wishing to hire a responsible and
professional contractor they can trust, have contacted me
many times with inquiries to what they should look for in
a contractor. Should their insurance policy include a clause
for hiring outside help, such as for a contractor? Is this the
responsibility of the contractor to have? Do they need to look
for a contractor that has a licence? Here’s what I advised Joel:
Licensed and legal contractors
There are two types of licences required, depending on where
in Ontario you live. Every municipality will require a business
license for the contractor in their legal business name. Some
Ontario municipalities go even further and require what is
called a “trade license” in both the name of the contractor and
his business, meaning that the municipality has set minimum
standards in place with testing and police clearances, which
serve as checks to ensure that the contractor is competent
in performing renovations on your property – this basically
means the city is looking out for you!
Sadly some municipalities in Ontario do not have this
type of trade licence. Essentially what this means is that the
contractor you hire may have absolutely no skill in doing home
renovations and could have just spent the last ten years of his
life working in retail. It also means that the municipality has
not tested or licensed him in this field of home renovations!
What happens when you live in the city of Burlington,
which does not have a trade license program, and you wish
to become a licensed contractor? I suggested to Joel that he
take the fifteen minute drive to Hamilton’s city hall and write
his Master Building Repair Trade License Exam; then he will
be able to promote himself in his hometown of Burlington
as being “better” and more qualified in his business of Home
Renovations and Repairs than any of his competition, and
also be legally able to work in the city of Hamilton. This is a
competitive industry where the work must be honestly and
properly done, and only the most qualified should be able
to thrive in!
Insurance and more insurance
Existing disability and life insurance policies have no bearing
on any liabilities regarding the work that is performed in
a customer’s home. Joel needs to have proper ‘contractor’s
liability insurance’ to protect him from all potential lawsuits
resulting from the day-to-day operations of this business.
Without this insurance in force, Joel would not even be allowed
to write his Master Building Repair Trade License at Hamilton’s
City Hall. Then there is the matter of WSIB (Work Place
Safety Insurance Board) coverage, which Joel must register
with, before any job can be performed, otherwise he runs the
risk of paying a very steep fine. Registration is mandatory
for all new businesses – whether one has employees or not.
To charge HST or not? That is the question...
It is not mandatory to charge HST until your business has
been in place for long enough to have earned the required
minimum threshold of earnings. However, regardless of this
guideline, I recommended Joel to register his contractor’s
business to charge HST from the start, as this not only makes
the business more legitimate, but is also especially important
in the field of home improvement – a type of business where
your legitimacy will always be challenged, whether spoken or
not. If you’re going to be paying HST for materials purchased,
it’s important to collect this tax and forward to Revenue
Canada. This also helps track business expenditures.
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