A generalist accountant and an IT contractor specialist are not the same file
PSB risk, agency HST treatment, owner compensation planning, and shareholder loan reconciliation require contractor-specific knowledge. These are the gaps that appear most often in files that have been handled by a generalist practice.
Signs the current file has gaps
These situations come up repeatedly in contractor files that were prepared without IT contractor-specific knowledge.
- 01 Have an accountant but PSB risk has never come up despite a single-client agency contract
- 02 The HST collected from your agency is being treated as income rather than a remittance obligation
- 03 Salary and dividend decisions are made at year-end with no planning during the year
- 04 The shareholder loan account is unreconciled or not being tracked between filings
- 05 U.S. client income is being reported without a review of exchange rates or GST/HST treatment
- 06 Questions about incorporation, PSB, or owner compensation are not being answered in depth
- 07 The current accountant handles many industries and has no specific IT contractor experience
What gets missed in a generalist file
These are the six areas where IT contractor files diverge most from what a generalist practice is set up to review.
PSB risk
A generalist accountant may file a T2 without reviewing whether the corporation is at risk of personal services business classification. For single-client, long-tenure agency arrangements, this is one of the most consequential gaps in a contractor file. CRA does not flag the risk proactively.
Agency HST treatment
HST collected from a staffing agency and deposited into the corporate account must be remitted to CRA. It is not income. Misclassifying this amount inflates revenue, understates the HST liability, and creates a balance owing that compounds across multiple filing periods.
Owner compensation planning
The salary and dividend mix affects personal tax, CPP contributions, RRSP contribution room, and the corporate tax position. A generalist often processes whatever the owner requests without reviewing the annual mix against the full picture.
Shareholder loan tracking
Draws, personal expenses paid through the corporation, and repayments all affect the shareholder loan account. An unreconciled or misunderstood shareholder loan balance can create a taxable benefit or trigger a CRA review of the corporate account.
U.S. client income
USD invoices, exchange-rate conversion, GST/HST zero-rating for export services, and W-8 form context are all specific to cross-border contractor arrangements. Without a review of these facts, the income may be reported inconsistently across the T1, T2, and GST/HST return.
Instalment obligations
Incorporated contractors often owe both corporate instalments and personal instalments depending on how compensation is structured. A generalist focused on annual filing may not track instalment obligations during the year, leaving the contractor with unexpected interest charges.
How the transition works
Switching accountants involves four steps: reviewing what exists, authorizing a new representative with CRA, transferring and organizing the bookkeeping file, and moving into ongoing work.
- 01
Compliance review
Before taking over the file, Teplov CPA performs a compliance review to assess the current state of corporate records, prior filings, government account access, bookkeeping, shareholder loans, and PSB risk. A dedicated client portal is set up for secure document collection.
- 02
Document collection
All relevant records are collected through the portal: prior T2, CO-17, T1, and TP-1 returns, GST/HST and QST filing history, payroll remittance records, corporate minute book, and QuickBooks Online or Xero access.
- 03
Review of filings and bookkeeping
Prior returns, bookkeeping records, and government account history are reviewed to identify gaps, misclassifications, unreconciled periods, and unresolved CRA correspondence. PSB exposure, agency HST treatment, and owner compensation are reviewed where applicable.
- 04
Written findings
A written summary of issues identified is provided, along with recommended next steps. This gives you a clear picture of where the file stands before any ongoing work begins.
- 05
Fixed-fee proposal
A fixed-fee proposal for ongoing services is issued based on the actual condition of the file. Pricing reflects what was found during the review rather than assumptions made before seeing the records.
- 06
Transition from prior accountant
CRA representative authorization is updated using the AUT-01 form or CRA My Account. The prior accountant is asked to provide copies of filed returns and working papers. The file is then organized for ongoing monthly and year-end work.
The New Client File Review
Most contractors who switch accountants have not had a detailed review of prior returns. The New Client File Review looks at how income was reported, whether GST/HST was filed correctly, how owner compensation was handled, and whether PSB risk was ever assessed.
The New Client File Review does not automatically mean amendments. It means understanding what the file actually contains before taking on new work. See the switching accountants guide in Resources for how amendment decisions and the reassessment window work.
Related guides
Detailed breakdowns of the areas most commonly missed in generalist IT contractor files.
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Switching Accountants as an Incorporated IT Contractor
CRA representative authorization, what records transfer and what doesn't, the professional handover, and how to decide whether prior years need amending.
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Personal Services Business Risk for Incorporated IT Contractors
What a personal services business determination means, how CRA assesses it, and the tax and expense consequences for incorporated contractors.
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Salary vs Dividend for Incorporated IT Contractors
How incorporated Canadian IT contractors should compare salary and dividends for tax, CPP, RRSP room, cash flow, and corporate planning.
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Reasonable Salary for Incorporated IT Contractors
How incorporated IT contractors should think about shareholder compensation, what CRA considers reasonable, and what salary creates that dividends do not.
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GST/HST Registration for Canadian IT Contractors
The $30,000 threshold, voluntary registration, input tax credits, and retroactive liability risk for IT contractors.
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Common questions
Q.01 How do I officially switch accountants?
Q.02 Do I need to get my files from my previous accountant?
Q.03 Can errors from prior years be corrected?
Q.04 What if my books are disorganized or behind?
Q.05 Will switching cause issues with CRA?
Q.06 How far back does the New Client File Review go?
- 01Book a 15-minute introduction call
- 02New Client File Review of your current filings and records
- 03Fixed-fee proposal based on what the review finds
Gaps in a contractor file do not close on their own
Share your current setup, what has not been reviewed, and how long the current arrangement has been in place. Teplov CPA responds within one business day.