Hello PFC,

I am currently hired by an external recruitment agency (Ontario), who's payroll I'm under for $25 an hour. I get no benefits or anything other than my paycheck for that amount. My contact is expiring next month and most likely the contract with the same agency will be renewed. It might also convert to a full-time contract (employee) with the employer with great benefits. But I don't know if it will at this point in time.

In my experience and assumption, the agency would be charging my employer about $30-$32 (maybe more?) per hour I work and pay me $25 with 0 benefits. This obviously won't do for me and I am looking into the possibility of asking my company if I can bill them as an independent contractor instead (if I'm not offered the FT role).

Now my questions are:

1. How do i actually start becoming a contractor? Will I have to draw up some sort of contract? All I know is I would be sending an invoice for my rate ($30 i guess) plus 13% GST/HST.
2. What will my tax rate be? I know what the employment income tax rates are, but I'm not sure if there are any extra taxes I need to worry about? Will I need to collect the 13% GST/HST?
3. At $30/h ($60,000) ill be in the 20.5% 9.15% bracket (Ontario). Will being an independent contractor make sense? (vs an employee of the agency) Do I need to "incorporate" (and what does this actually entail?)
4. I am of the understanding that I can deduct certain expenses on my taxes if I switch to an independent contractor like food and vehicle, this true?
5. I have yet another option of negotiating with the agency for $27 an hour (at most, I've only been at the company for <6 months) but I doubt they'll approve anything that eats their profits, but if approved is this a better option?
6. Any other suggestions/opinions/resources welcome :)

Edit: My employer does employ independent contractors so I don't think it makes a huge difference for them if I continue with the agency or if I start billing them myself.