Independent Contractors FAQ about Retirement Savings and RESP

I’ve had quite a few questions lately about retirement and education savings. If you are a self-employed independent contractor – incorporated, sole proprietor or partnership – then saving for your retirement or your children’s education can be a little more complicated.

Many employers offer a Group Savings Plan to arrange for regular income deductions that are automatically contributed to a personal RRSP or RESP. Employer group savings plans are great if you're a permanent employee for a company that offers one. But what are your options for retirement and education savings if you work for yourself?

I’m not a financial planner myself so I put your questions to Michael Collins, a financial planner who manages the group plan for our internal staff and also my personal investments. Did you notice that we share a last name? Yes, we're related. Michael Collins just happens to be my Uncle Mike. Here are Mike’s answers to some frequently asked questions from independent contractors.

1. As an independent contractor (incorporated, sole proprietor or partnership) how do I save for my retirement?
   
   Independent Contractors, if they have income through earnings (not dividends) are allowed 18% per year to a maximum of $22,000.00 they could put into an RRSP. If they are behind or starting in later years of life they might qualify for another method of deposits (Individual Pension Plan) where they could put in significantly more, but must meet certain criteria to qualify.
2. Are Group Plans available for independent contractors?
   
   Your Financial Planner should have all the required documents to set one up and yes I do those also.
3. What is the maximum I can invest in RRSP/RESP?
   
   18% on income can be put into RRSP to a maximum of $22,000.00 for this year.
   RESP is $5000.00 per child annually but only $2,500.00 each get the 20% government grant added on.
4. Is there any carry over if I haven't invested in the last 5 years?
   
   RRSP's – yes, the full qualifying amount of 18%/year of earnings (in any amounts desired) which are not used can be carried on to age 71. On an RESP you can catch up the full qualifying amount also but only by using two years in any one year.
5. What is the tax credit for RESPs?
   
   There is no tax credit, but they do grow tax free.
6. Can I invest in an RESP for someone outside of my immediate family? A cousin, nephew or niece?
   
   Yes but the parent must sign off on it so that there isn't a doubling up of credits or government grants.
7. How much would my child need to invest if they are going to university in 5, 10, 15 or 20 years?
   
   There are tables available to help with this question, but assumptions have to be made on Interest Earned and the costs associated with which University they wish to attend or the type of program they are taking, whether 4 year Arts or a 7 Year Doctorate.

If you have more questions for Michael Collins here's how to contact him:

Micheal Collins
Dundee Wealth Management
2225 Kingsway Drive, Kitchener, N2C 1A2
519-579-5477 phone
519-744-5506 fax
Click this link to watch my video

Suggestions for Further Reading:

• Check out Toronto Star’s new site www.moneyville.ca which includes this nifty Retirement Age Calculator
• Freedom 45: The Math behind My Retirement Plan by Tim Stobbs for the Toronto Star, Monday, October 25, 2010

Welcome to Toronto, Silicon Valley North

A tech revolution is taking off right here right now in Toronto. What does that mean for you and me? It means exciting work opportunities and fierce competition for creative technical talent.

Why are companies such as EA, Apple, Microsoft, RIM, Disney, Facebook, Twitter and Google partnering with and buying Toronto tech companies?

1. Excellent People – Mark Zuckerberg, founder of Facebook says it best, "We have not once bought a company for the company. We buy companies to get excellent people."
2. Great Schools – Toronto has access to a wealth of talent being produced in schools like Waterloo (Masters Program in Technology Entrepreneurship), University of Toronto, Sheridan College, Queens University, and many others which have world renowned Technology and Engineering programs.
3. Community – Toronto has a community of young tech entrepreneurs who are building word class companies and networking at camps, informal meetings and through social media sites like Sprouter.
4. Government Tax Credits – SR & ED (Scientific Research and Experimental Development). “SHRED” gives millions in stimulus dollars to small and medium sized businesses. CEO of Polar Mobile, Kunal Gupta, says he “briefly looked at outsourcing to India or China but between the talent and the tax credits, we realized it was cheaper to do it in Toronto.”
5. Extreme Labs creates an environment for developers to build companies and follow their dreams. They run a very cool training program for young entrepreneurs who are given $5000 and during a 12 week session create products that are presented to a group of VC’s and investors (Dragon’s Den Style). The three companies that were successful last year raised 1.5M.
6. Funding – Money is becoming more available to entrepreneurs. Companies such as Tech Capital, RBC Ventures, Blackberry Partners Fund, Extreme Venture Partners and Growthworks are investing millions in technology startups.
7. New Devices – This tech trend has staying power. Smart phones are selling more rapidly than PC’s. Tablets will gain market share as the price point comes down over the next 6 months. Apps are driving sales of these devices.

Let’s look at some of the recent amazing success stories of Toronto companies:

• Polar Mobile – 6 million downloads of their apps – Sports Illustrated, Time, Food Networks, CNN, CBS, NCAA Sports, and 500 new apps to come for Microsoft
• Five Mobile – custom apps for Rogers, Disney and Sony Pictures – one of their apps for the The Score has over 6 million downloads
• Rypple – just raised 7M – their software integrates smartphones and office email
• Extreme Ventures – invested in 14 tech start ups – 250 staff – one of their companies BumpTop recently sold for a rumoured 35M to Google
• Sysomos – allows corporate clients to analyze Twitter and Facebook conversations – sold last summer for 35M
• Endloop – fantastic app called iMockups that gives developers a template for developing apps on an iPad – all object oriented

Toronto is an exciting place to be right now if you have an entrepreneurial spirit and you’re interested in app development. We are fortunate to have a number of these companies as our clients.

Action Points

• Talk to us about the possibility of working for one of these companies. Email us at cooljobs@stafflink.ca.
• Join the conversation and network with entrepreneurs. Join Sprouter, a Twitter-like community for startups and entrepreneurs, and answer the question “What are you working on?”
• Read more about the tech revolution in this November 2010 Toronto Life Feature Article "Download My App" posted by Kunal Gupta of Polar Mobile:

Tech Kings - Toronto Life Article

   

Related Articles

Top 10 IT Skills in Demand in 2010
Canada's Summer Job Market is Sizzling
10 Job Networking Strategies to Consider if You're a Newcomer to Canada
The Job Market Longtail

Written by Tim Collins Stafflink.ca
timc@stafflink.ca
www.twitter.com/stafflinks
www.linkedin.com/in/timrcollins

What Should I Wear to an Interview for a Job?

Your appearance, your smile and your handshake create that all important first impression. You know what they say--people form a lasting impression within 20 seconds of meeting you. I've also read that people know in the first 20 seconds whether they would be willing to hire you. The first impression has very little to do with your words and a great deal to do with your attitude, energy and appearance. Why not tip the scales in your favour with a great outfit.

I was struggling with what to blog about this week when I stumbled upon this awesome little video from Harry Rosen. Harry Rosen caters to men but I think the principles apply to everyone. Even if the office you are interviewing at has a business casual dress code you still need to take special care with choosing what to wear to the interview.

With few exceptions you should dress more formally for an interview than you would normally dress when you go to work. The care you take with your personal appearance implies respect for the employer and interest in the job.

But please don't feel like you have to run out to Harry Rosen and spend $1000 for a new suit! You can put together a great outfit for a much lower price if you shop around a bit. You might have to invest a few dollars in tailoring and dry cleaning to make the outfit look perfect, but it will be worth it.

So here's the video for what it's worth!



Related Posts:
Five Tips to Stay Motivated During the Job Search
How to Land a Job in 7 Seconds
The Hidden Job Market: How Tim Got In!
Interview Dos and Don'ts

Written by Laura Upcott
http://stafflink.ca/
laurau@stafflink.ca
http://www.twitter.com/lauraupcott
http://ca.linkedin.com/in/lauraupcott

Comparing Apples to Berries: 4 Reasons Why I Pick the PlayBook

As a self-proclaimed “crackberry”, I was thrilled when Mike Lazaridis announced the arrival of the Blackberry PlayBook. As a Wilfrid Laurier Alumni, I have seen the excitement that RIM has brought to the town of Waterloo, Ontario and Canadian’s in general. I’d be lying if I said I hadn’t spent a few afternoons playing with Apple’s “PhotoBooth” application or playing with my friend’s iPhones. However, I’ve spent more time napping with my Blackberry, admiring the flurry of RIM buildings on Columbia St, attending career fairs at RIM Park and BBMing my friends when I spot our local celebrities Mr. Balsillie or Mr. Lazaridis out for lunch.

So why would I rather purchase a PlayBook than an iPad?

1) Flash Flash Flash
Although Steve Jobs has made a gallant effort at eliminating Flash, I think it is here to stay. Flash is a wonderful tool and Blackberry embraces it. Virtual training, tours and demos are just some of the capabilities that Flash makes easier. In addition, Adobe has integrated Adobe Flash Player 10.1 and Adobe AIR apps on the PlayBook. This creates a large opportunity for PlayBook application development – how exciting!

2) Video Conferencing
The corporate crowd will appreciate this functionality. With iPad’s lack of camera, the PlayBook takes the cake on this one, providing users with two cameras and an HDMI hook-up. Need I say more?

3) The Specs
Some would criticize the PlayBook for its size (7 inches compared to the iPad’s 9.3 inches). I think the smaller size provides a perfect balance of convenience and readability. Plus for a small package it sure has impressive hardware. The PlayBook sports a dual-core 1GHz processor (the iPad only has a single-core) and 1GB of RAM (double what the iPad packs).

4) Local Support
Why wouldn’t I support the products that my friends and family help produce? RIM employees are my hometown heroes. RIM has provided over 26,000 jobs to Waterloo residents. Many of my classmates specifically attended school in Waterloo in hopes to score a job with RIM. As a Canadian, I feel an obligation to cheer on the efforts of a company that has completely transformed a local economy.

Whether you want to attribute my love of RIM product’s to the years I’ve spent in Waterloo, the endless job opportunities they have provided my friends or the plain fact that they make a magnificent product – I am and will always be a fan of the “Berries”.

Related Articles:
Who Do You Love? Blackberry Torch or iPhone?
Top 10 IT Skills in Demand 2010
Love What You Do
Why Is It So Difficult to Unplug From the World

Written by: Michelle De Rubeis, Technical Recruiter, StaffLink Solutions Ltd.
Website: http://www.stafflink.ca/
Email: michelle@stafflink.ca
Twitter: Twitter.com/stafflink1
LinkedIn: Linkedin.com/in/mmderubeis

Sole Proprietor vs Incorporation for Independent Contractors

As a self-employed independent contractor you're an entrepreneur and a risk taker. You control your destiny by developing your skills, producing exceptional work, expanding your networks and building a personal brand. If you add excellent communication skills to your repertoire then businesses will compete to hire you and you'll have more work than you can handle.That's why some people choose entrepreneurship, because they feel that the rewards outweigh the risks.

How do you know when it's time to get incorporated? Here are some points to consider as you weigh the pros and cons of incorportating your business:

1/ Cost
One of the biggest advantages of sole proprietorship is that setting up and administering the business is comparatively easy and inexpensive. It costs $1000 or more to incorporate your business depending on who you hire to assist you with the process.

2/ Liability
One of the main advantages of incorporation is limited liability. A sole proprietor assumes all of the liability for the company. As a sole proprietor your personal assets, such as your house and car can be seized. As a shareholder in a corporation, you are not responsible for the debts of the corporation unless you have given a personal guarantee.

3/ Corporations Carry On
Unlike a sole proprietorship a corporation has an unlimited life span. The corporation will continue to exist even if the shareholders die or leave the business.

4/ Tax Credits
Income tax rates are lower for Corporations than for personal income. Using tax planning, the tax burden can be reduced by earning income through a Corporation, due to the lower corporate tax rates.

5/ Income Control and Tax Deferral
If you are incorporated, you have options to determine when you personally receive income from your corporation. Being incorporated allows you to report your income at a time when you will pay less tax. You may be able to realize tax savings if you receive your income at a time when you are in a lower tax bracket or if taxes have fallen.

6/ Income Splitting
With a Corporation, there exists the opportunity to pay shareholders salary, dividends or a combination of the two. Your spouse and/or children could be shareholders in your corporation giving you the opportunity to redistribute corporate income to family members with the lower incomes taxed at a lower rate.

7/ Perception
Some people perceive corporations as being more stable. Having Ltd., Inc., or Corp. as part of the company’s name may help you attract business.

8/ Paperwork
Incorporation brings with it extra accounting and paperwork. Corporations must maintain minute books, corporate bylaws. Other required corporate documents are register of directors, the share register and the transfer register.

9/ Non-Calendar Year Ends
Corporations have the ability to choose their year end and not be restricted to a calendar year-end as with a Sole Proprietorship. This opens up the possibility of bonus deferrals. Choosing a year-end may be better for year-end paperwork filing should your business be busy at the end of the calendar year. By incorporating you can choose to have your year-end fall during a slow period.

Conclusion
I‘ve outlined some of the advantages and disadvantages of incorporation versus sole proprietorship but what’s the bottom line? Is getting incorporated worth it or not? I recommend that you discuss your personal situation with your accountant and lawyer before deciding.

Further Reading:
Business Registration in Ontario
How to Incorporate Your Business
10 Job Networking Strategies to Consider if You're a Newcomer to Canada
3 Resume Publishing Tools to Pump Up Your Job Market Value

Written by: Tim Collins
Stafflink.ca
timc@stafflink.ca
www.twitter.com/stafflinks
www.linkedin.com/in/timrcollins

Diary of a Delusional Laptop Shopper

Sometimes you get what you pay for. At least that was true for me when I bought some new laptops for our office last week. Maybe you fall into one of these categories:

• Bargain Hunter: You want a decent system for a great price.
• Power Ranger: You want the fastest, most kickass system money can buy.
• Empowered Consumer: You want a quality system with excellent support.
• Apple Devotee: You just march into the Apple store and pick the sexiest Mac your credit card can handle.
• DIY Ninja: You build your own computers from scratch with components ordered online from a secret network of suppliers.

Me? I thought I was a power ranger but a recent mistake proves that I’m more of a delusional bargain hunter.

I've purchased many Dells over the past 15 years and until recently I was an enthusiastic cheerleader for Dell. Over all our Dell computers have been quality machines that lasted many years without issue. I've rarely needed to call for technical support. But with the last two Dell laptops I purchased I've noticed a change in the quality of their customer service. On two occassions an automated solution Dell offered us was buggy and usuable with our system. So I'm ready to take a chance with another brand. Here's my story:

It’s my lucky day. It’s back to school season, computers are on sale everywhere and I need to replace some old computers at the office. I'm in Staples shopping for a geometry kit when a shiny Acer laptop catches my eye. I check out the specs: 2.2 GHz Intel processor, 4 GB memory, video cam and OMG it's only $399! It's way more computer than the Pentium IV Dells I bought 5 years ago for less than half the price I paid then. What a steal!

A sales rep approaches me at that moment. He has me at "hello." But when he mentions that Staples services their computers on site I'm really sold. Two days later I proudly present new Acer laptops to our recruiters.

Red Flag 1: One of the Acer keyboards freezes. It seems to be a "one-off" so we reboot and carry on.

Red flag 2: The other Acer freezes three times in one day. I bring the repeat offender back to Staples. The rep who originally sold me is there. I'm in and out of the store within 15 minutes carrying an identical replacement Acer. Problem solved, or so I thought.

Red Flag 3: I read Joe Stoll's blog “How a $400 PC from Future Shop for Your Business Can End Up Costing You Double.” Uh-oh.

On the weekend I notice that The Shopping Channel is offering special build of Dell Inspiron Laptops for $699. I’m mesmerized by the rainbow of glossy colours they come in. So tempting. But I decide to wait and see what happens with the Acers.

On Tuesday the replacement Acer freezes several times. Maybe I should buy those Dells from The Shopping Channel after all? My staff selects colours-I'm a bit iffy about the purple. A voice of wisdom (Tim Collins) warns me not to buy the Dells until after I return the Acers to Staples.

When I march those defective Acers back into Staples that evening, Todd Roberts, a divisional sales manager, is there to help out. He takes the Acers back without batting an eye. Then he refers me to his #1 sales guy who up-sells me (of course). You get what you pay for right?

I’m an easy mark but it feels like a win-win. After experiencing Staples' excellent customer service with the defective Acers, and knowing that they do most of their repairs onsite, I feel okay about buying HP Pavillion DV6's for $699. I’m impressed with the technology team at Staples (Dundas and Winston Churchill, Oakville). Even when they made mistakes they took responsibility for fixing them. Time will tell but so far it looks like my story has a happy ending.

This morning Todd drove all the way from Staples Oakville to our office in downtown Toronto and personally delivered two gorgeous new HP laptops to our office. So far so good. Our recruiters love their new HPs.

What’s next if my rosy relationship with Staples and HP changes for the worse? I might be forced to become a DIY Ninja and build my own computers from scratch. How hard can it be?...ya right =)

Related Post: Got any old computers lying around?

Written by Laura Upcott
http://stafflink.ca/
laurau@stafflink.ca
http://www.twitter.com/lauraupcott
http://ca.linkedin.com/in/lauraupcott

7 Ways Technical Tests Sabotage the Hiring Process

Do technical tests actually weed out the best candidates? Poorly designed tests can alienate candidates and cause you to reject the candidates with the greatest potential. My purpose here is to examine the common pitfalls of technical testing that may be sabotaging your hiring process.

As an IT recruiter you can't be an expert in every technology out there. How do you ensure that IT candidates really understand the technology and have what it takes to do the job? Technical skills testing, right?

Believe me, I wish it was that easy. Unfortunately technical testing for job screening is not as objective and accurate as it appears. Here are seven things to keep in mind when you use technical testing for job screening:

1) Test results don't reflect what it really takes to be successful on the job. Consider the intangible qualities that your most valuable technical employees bring. Are you looking for someone to help your team develop an innovative technical solution? Creativity, team-work, analysis and synthesis of existing solutions, out-of-the-box thinking, and dogged determination may be essential job requirements that won't be reflected in the test results.

2) Technical tests reinforce out-dated stereotypes. We all know the myth that technical people (techies, geeks, gurus) have brains that work like computers. Computers follow rules. Programmers, developers, analysts and architects figure out how to hack, collaborate, stretch and extend the rules to create new solutions. Programming is a literacy skill and an art. It takes both sides of the brain to do it well. The most in-demand technical gurus I meet are generous and driven creative problem solvers with extensive communities of peers in their field. I've yet to see a test that evaluates how a coder utilzes both sides of her brain to create new applications or extend a platform in new directions.

3) Badly worded questions. Some tests have ambiguous questions with multiple correct answers. But the anwser key only accepts one particular response. Sometimes the test taker knows more about the technology than the test writer/marker. The test taker might propose an alternative solution that the marker doesn't understand so it's marked wrong.

4) The test is out-dated. The test may not be up-to-date with the current state of the technology. Responses that were valid when the test was written a year ago may be incorrect now. A typical example of this is when a tester asks a job applicant to debug a piece of programming. A variety of solutions are possible but only one is known to the tester. So when the test taker proposes a solution that is up-to-date with current best practices his response is marked incorrect.

5) Irrelevant questions. Some tests ask people to define obsure technical terms. If you need to know the definition of a term while you're on the job, you'll just go to the knowledge base and look it up. When people develop technical solutions on the job they usually have free reign to reference any resource they need. People don't memorize manuals. Why bother when it changes every time the technology get updated?

6) The test taker might not take the test seriously. Imagine this: You're an in-demand developer who's spent years building a career in your field. You're at the tailend of a contract project you've been with for about 6 months. It's 9:40 am and you've just finished an interview for a job you don't really need. The interviewer asks you to take a technical test. Sure, no problem, but they're waiting for you back at your current project. So you flip the test off as quickly as possible and high-tail it out of there.

7) Test-taking anxiety. Before I ventured into IT staffing I was a teacher so I've seen the effects of test anxiety first hand. Many people freeze in test situations yet they are very capable of performing in normal working conditions. These people will seldom ask for accommodations but they may have excellent experience and qualifications for your role.

How do you determine when technical testing is appropriate? Consider these questions: Does this job require someone who can develop a new solution or push out the boundaries of an existing solution? Then you might want to put more emphasis on the candidate's reputation, references and experience (portfolio) when evaluating them for the job.

Does the test reflect the way people really work? Is the test up-to-date? Does the test allow for multiple solutions? Do you have a technical person who can back up the test results with a face-to-face technical interview?

I'd love to hear about your experiences with technical testing.

If you liked this article you might also be interested in reading:
Technical Interviews: A Survival Guide for Recruiters

Posted By Tim Collins, President and Founder,

Stafflink Solutions Ltd

http://www.stafflink.ca/

timc@stafflink.ca

www.twitter.com/stafflinks

www.linkedin.com/in/timrcollins