The Ontario Government made The Workplace Safety and Insurance Board (WSIB) coverage a mandatory requirement for most in the construction industry, including a self-employed contractor with no employees. This law requires these contractors to have a WSIB Clearance Number or Certificate in order to continue with their contracts and to be paid. These clearance numbers are valid for 90 days and are issued when the contractor is in good standing with reporting and payments. While we all can agree there are good reasons for this law, issues can arise when an independent contractor runs into cash-flow and debt problems.
The Self-Employed Cash Flow Crunch
Debt problems for self-employed contractors do happen. A job can cost more than expected, customers might not pay on time or at all. There may be longer periods without contracts, weather delays, start-up costs, and many other reasons why cash flow becomes a problem. Not being able to work due when you can’t get a clearance certificate will only escalate the cash crisis. In addition, if the individual is not able to pay the WSIB premium then they are likely carrying other debts as well like HST, credit cards and bank loans.
Effects of Bankruptcy or A Proposal on WSIB Debts
Can WSIB be included in a personal bankruptcy or a consumer proposal? The answer is yes. A representative from WSIB advised me this month that their current policy is that a new WSIB account number will be issued after a bankruptcy but the same account number will be maintained for someone in a consumer proposal. For a proposal, WSIB allocates the arrears to a sub account so that the account appears to be started at zero.
If you are a contactor and are struggling with your debts (including WSIB premiums) then maybe a consumer proposal or personal bankruptcy will help. A few key points to consider:
- WSIB filing and reporting will have to be up to date
- You will want to ensure you are able to get your HST and personal tax returns filed, and
- You will want to review your business and projected cash-flow to ensure your future business venture will be successful and able to stay current with your future WSIB and tax remittances
If you are experiencing debt problems in your small business, please contact us to talk with a bankruptcy trustee who, as a restructuring professional, can to review your situation and make a plan to deal with your business and personal debts so that you can create that fresh start you need for your business and personal life.