One of the areas of uncertainty for people is when they are incorporated. Is being a shareholder defined as “self employed”? The answer is No…not usually. Now it is is possible the government will change this definition, however, I am very doubtful and skeptical of it.
However, there is a bit of relief. Many business owners pay themselves with dividends for a variety of reasons, but one of the reasons is to avoid CPP, which is 10.2%. However, for the next 3 months, the government is giving you a 10% credit.
Because your incorporated company is a different entity than you personally, you have the right to be an employee of that company. Because there is really not additional cost to you, I would almost recommend that you become an employee of your company. No…you can’t claim EI still. However, it does close that gap of uncertainty with no additional real output of money. It turns you into an “employee” and away from “a shareholder”.
Being an employee also gives you other benefits, such as increasing your CPP benefits, RRSP contribution limits, and Worker’s Compensation coverage (in some provinces). At least for 3 months, I see this as a WIN for business owners.
NOTE….IF YOU DON’T KNOW HOW TO DO THIS, PLEASE REACH OUT AND LET ME HELP!
