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What to Expect When You Work with a Canadian PEO

Posted by Ray Gonder

|

Jul 18, 2018 9:00:00 AM

What_to_Expect_When_You_Work_with_a_Canadian_PEOWhether you’ve been operating in Canada for a little while or you’re just undertaking your first Canadian business expansion, you’ve likely heard about the assistance available to international firms in Canada. After careful consideration, you’ve decided working with a Canadian professional employer organization (PEO) makes plenty of sense for your business. In fact, you may wonder why you didn’t make this move sooner.

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As you search for the right PEO for your company, you may wonder what you should expect from working with a Canadian PEO. Here are a few things you should look for in the experience.


Seamless HR

Most companies turn to PEOs for assistance with their human resources operations. You may decide you need assistance with payroll or you need more all-encompassing services. A PEO generally offers more than a payroll provider alone can.

If you opt to work with a Canadian PEO, you can expect this comprehensive HR experience. The PEO can help you administer everything from payroll to benefits to vacation pay. They can help you hire and terminate employment as necessary. They can also help you monitor compliance and offer you advice on revisions to the laws affecting your operations.

All in all, you can expect seamless delivery of HR functions. Since the PEO is responsible for almost all of these functions, they ensure cohesion and consistency in the work.


Expert Advice

Another thing you can expect from your Canadian PEO is expert advice. The PEO won’t just help you monitor compliance. They can actually work with you to devise a better policy to ensure your compliance.

The people on staff at the PEO often have expert knowledge themselves. As laws changes, they can dig into their experience and their knowledge, and even research to help you determine the best path forward.

If you’re concerned about avoiding an audit, the PEO can assist you in staying on top of your records and remitting your payroll on time. As provinces such as Ontario, Alberta, and Quebec reconsider their employment standards legislation, the PEO can help you devise a new policy to meet and exceed minimum standards for wages, workplace safety, and so much more.


A Worry-Free Experience

Many of the functions a PEO carries out on your behalf can be quite complex. Since they carry a legal dimension, they’re also very important. If you make a mistake, you could be on the wrong end of a CRA audit or facing fines. Other decisions impact you no less, as tax inefficiencies could lower your business’s profit margins.

Working with a Canadian PEO can ease all these worries. Sometimes, when you hand off important business tasks to outside firms, you may find yourself worrying about them more. If the provider is late or makes mistakes, you may worry even more.

With the best Canadian PEOs, this isn’t an issue. While there are sometimes unavoidable delays and mistakes happen to even the best, a good Canadian PEO is going to take steps to rectify mistakes as quickly as possible to ensure they don’t happen again and to communicate with you every step of the way. They’ll quickly put you at ease.


Great Service

The best Canadian PEOs are those that deliver the best service to their clients. They communicate, and they’re happy to discuss your services with you. They’re never short on advice, and if they’re unsure, they’ll help you look deeper into the subject. If there is a mistake, they’re going to make sure it’s resolved quickly and easily.

In short, you can expect great customer service when you choose to work with the right Canadian PEO. Do your research and consider your options carefully. The right PEO is out there.


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Topics: Professional Employer Organization

Why You Shouldn’t Expand into Canada without Assistance

Posted by Shannon Dowdall

|

Jul 11, 2018 9:00:00 AM

Why_You_Shouldn_t_Expand_into_Canada_without_AssistanceA growing business is a good thing. Almost any business owner will agree with this sentiment. You may experience some “growing pains,” but overall, expansion is a good step forward.

Download "What Are You Leaving to Chance By Handling Payroll on Your Own" Guide

International expansion can be even more exciting. You’ve carefully evaluated all of the opportunities, and you’ve picked your next market strategically. If that market is Canada, you’ve no doubt started considering many different aspects of your business expansion.

While expanding a business into Canada can be exciting, it can also be challenging. Managing this by yourself can be quite difficult, even if you have team members who have set up Canadian business operations before.

One of the best things you can do when you plan to expand into Canada is engage the assistance of a knowledgeable firm.


Get Expert Advice

Expanding into Canada may seem easy, especially at first glance. The deeper you dig, however, the more complex you’ll find the process. Have you thought about different business structures? All of them have different tax implications for your business operations in Canada.

What about setting up the necessary infrastructure such as banking and insurance? There’s a lot of red tape surrounding infrastructure.

What will happen to your human resources activities? If you’re planning to administer payroll in house, you may want to think again. If you need to bring some of your personnel into Canada to oversee set-up operations, how can you go about making sure they have the right paperwork?

A knowledgeable firm has experts on staff who can assist you in answering these questions and many more. Their expert advice will help you make better decisions about setting up your Canadian business right from the start.


Streamlining Operations

If your business is expanding, you’re probably busy enough as it is. Business expansions usually don’t happen in stagnant or declining companies. As you look to start up operations in Canada, you could also be contending with a full plate at home.

This can cause undue tension and strain on you and your existing personnel, especially if you’re unsure of the rules. Your legal team may recommend a particular business structure without fully studying the tax implications. The accounting department may not set up payroll in accordance with the Canada Revenue Agency’s requirements. HR might begin interviews by asking questions you’re not allowed to ask in Canada.

Getting a helping hand from a Canadian expert can help you avoid these situations and streamline your processes instead. The knowledgeable team at your partner firm knows the ins and outs of Canadian employment legislation and payroll. They can even help you execute some of these functions.


What Happens without Assistance?

Some business owners believe they don’t need help to expand into Canada. Some of them may believe this because they or other team members have dealt with Canadian expansions before. Some may think they know how to expand into any country after overseeing an expansion into another market, but not necessarily the Canadian one.

Still others just don’t think they need help. They believe they can handle everything themselves.

In many cases, this leads to a failure to thrive. While the business may survive, there will be a rocky period as the new Canadian operation starts up. Mistakes can cost businesses, and these can hurt both your new Canadian expansion and the parent business.

Getting a helping hand means you can more readily meet the challenges of Canadian operations. It also means you’ll be less likely to face issues such as lawsuits, tax inefficiencies, and even fines and audits from the CRA.


Who Can Help?

Now you understand the importance of asking for assistance during your Canadian expansion. The question is who can you ask for help? One of your best bets may be a Canadian professional employer organization (PEO). They know their way around employment legislation, HR, compliance, and payroll, and they’re uniquely positioned to help you keep operations running smoothly.


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4 Top Tips When Acquiring a Canadian Business

Posted by Stacey Duggan

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Jul 4, 2018 9:00:00 AM

4_Top_Tips_When_Acquiring_a_Canadian_BusinessOne of the most efficient ways for a foreign business to enter the Canadian market is to acquire a Canadian business. If you’re acquiring your first Canadian business or adding another to the list, you’ll want to keep these tips in mind.

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1. Think about Tax Efficiency and Business Structures

You’re moving forward with the acquisition process, but have you given any thought to what might happen once you’ve finished it? You’ll need to think about how the businesses are structured. Your Canadian company may be its own corporation, but how will that affect your taxes? Keep in mind you could be looking at paying taxes in both Canada and your home country.

Business structure will play into tax efficiency. Sometimes, leaving a business as a corporation is the most tax-efficient thing to do. If you’re planning to merge this new Canadian acquisition with another Canadian business or with your own company, careful attention to structure can help yield better tax efficiency.


2. Be Familiar with Legislature

After you’ve started thinking about business structure and tax efficiency, your thoughts will probably turn to yet another topic. Compliance is important, particularly with tax laws. It’s the major reason you want to contemplate structure and tax efficiency to start with.

This plays into a larger theme, as compliance affects all of your operations. Compliance in your HR and payroll operations is clearly a concern for any business looking to acquire another in Canada.

Canadian law is often different than that in other countries, so it’s a great idea for those acquiring a Canadian business to be familiar with legislation. Take a look at vacation pay, hours of work, worker’s compensation, and more, to familiarize yourself with the legislative landscape.


3. Work with a PEO

Compliance, payroll, and HR activities such as hiring are all big jobs on their own. If you’re unfamiliar with legislation pertaining to these subjects, they can become even more complex tasks for your HR teams.

Instead of muddling through on your own, consider partnering with a professional employer organization (PEO) to help you. A Canadian PEO is going to have an intimate knowledge of the rules and regulations governing your new business. They can use their expertise to assist you in almost all of your endeavours.

Maintaining compliance has never been easier. Better yet, your PEO just may have some great advice about how to structure your business or assist US employees in coming to Canada. Since they have the experience, they also have expert knowledge you can rely on.


4. Be Aware of Differences

Canada has a different culture. Although it shares many similarities with the U.S., and many Canadians can trace their roots back to the U.K., Canadian culture is quite unique compared to any other. Cultural differences can make themselves known in many different ways, from the values reflected in the legislation to expectations about salary and benefits.

Anyone acquiring a business in Canada should be aware of these differences. For example, you may note Canadian salaries tend to be a bit lower than those of their American counterparts. Canadians tend to expect compensation in different ways, however, as many companies offer more robust benefits to their employees.

Another difference to note might be the healthcare system. While American federal law currently requires employers to provide health insurance to their employees, Canadians have many basic healthcare services covered by provincial agencies. Pay attention to details here. The business may already have great benefits and salary structures in place.

Keep in mind that legislation can also be different from place to place. Much like the U.S., Canada is not a monolithic state or culture. Each province can set some of its own employment laws.

If you keep these four tips in mind during the acquisition process, the transition from purchase to ownership can be quite smooth.


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Topics: Business Expansion

Is It Time to Break up with Your Professional Employer Organization?

Posted by Corinne Camara

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Jun 27, 2018 9:00:00 AM

Is-It-Time-to-Break-up-with-Your-Professional-Employer-Organization-compressorWorking with a professional employer organization (PEO) is a strategic move for many business owners. It has plenty of advantages for those involved with international companies looking to expand into other territories. In fact, partnering with a PEO is one of the smartest things an American firm looking to expand to Canada can do. It’s helpful for companies based in other countries as well.

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Not all professional employer organizations are created equal, however, and the PEO you’re working with currently may not be living up to your expectations. Is it time to break up with them and look for someone else? Here are some of the signs you should look for.

A Lack of Communication

How often do you hear from your professional employer organization? If the answer is “almost never,” then it’s likely time to end the agreement and look for a new PEO. 

Communication is important for keeping business operations running without a hitch. If a change is made to CRA rules and regulations concerning taxable benefits, you want to know about it. You might want to reconsider the benefits you offer to your employees. 

There are so many things you’ll want to know when it comes to your business operations in Canada. Your PEO should be communicating and discussing these with you. If they’re not, it’s time to break up and move on.

They’re Not Compliant

One very good reason for international companies to work with a PEO is to improve their compliance with Canadian law. It’s quite likely you and your HR team won’t know everything there is to know about Canadian employment legislation. You want the professional employer organization you work with to have expert knowledge and to put that knowledge into practice. 

If you’ve been penalized or audited by the CRA or another government agency in Canada, your PEO is likely non-compliant. While mistakes do happen and laws do change, you’re working with them to avoid these negative outcomes. If it happens more than once or becomes a regular occurrence, it’s time to move on.

They Don’t Have the Services You Want

Some PEOs offer seemingly every service under the sun. Others have a much slimmer selection of services for their clients. The question is more about your business and the services you need. If your PEO doesn’t provide the services you want or need, it’s time to look for a PEO that does.

Sometimes, this issue arises from changes within your own business. Now that your Canadian operations are growing, you need an additional service. You didn’t need this when you signed up with this professional employer organization, and you didn’t anticipate you would need it.

If you’ve “outgrown” your current PEO and their service offerings, it’s time to look for a new partner.

They Have Hidden Fees

Working with a professional employer organization is a business move. You partner with them to deliver services, which you pay a fee for.

Cost is clearly something on your mind when you work with a PEO. Some providers are upfront with their fees. Others will offer you a low price and then introduce all sorts of additional or “extra” fees for particular services.

These hidden fees add up, costing you more and driving down the value of your partnership with the PEO. If you’ve ever received your bill from your PEO and wondered why it was so high, it could be time to break up with them and look for someone else.

Finding Another PEO

There are many PEOs, but if you’ve had to break up with one provider, you may be leery about others. Good PEOs are out there. Look for one that provides excellent communication and is transparent about their fee structure. The right PEO for your business is out there.

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Topics: Professional Employer Organization

How to Take Advantage of the Gig Economy with a Canadian PEO

Posted by Corinne Camara

|

Jun 20, 2018 9:00:00 AM

How_to_Take_Advantage_of_the_Gig_Economy_with_a_Canadian_PEOYou’ve likely heard about the gig economy by now. Both employers and employees are benefiting from this bold new era. While it’s a major realignment from the older economic model, it has many advantages. Employees are moving from “gig” to “gig,” gaining experience and often making a name for themselves as experts in their fields.

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Employers are also benefiting from the structure of the economy. It allows them to hire people when they need them, for as long as they need them, and then to part ways when the job comes to a close. The employee moves on to their next exciting opportunity.

The gig economy has been spurred by many different changes, from the technological to the social. Economics plays a large role as well, as many employers can save money while workers may even be able to increase their earnings.

The gig economy is now beginning to dominate the economy in many different areas of the globe. Europe, the US, and Canada all have developing gig economies. How can you take advantage of this development?


International Firms and the Gig Economy

International firms operating in Canada may see even more advantage with the gig economy than other companies. One reason for this is they may have more seasonal operations or more limited-time postings. You may want to hire someone to execute a marketing event or you may want to bring a computer programmer on board to oversee a small, limited-time project.

Hiring someone on the ground is often better, especially if you’ll need them to come into the office. If you need someone familiar with the market or a local area, you may also find it best to hire locally.

The obvious problem is that it can be difficult to hire, even at the best of times. If you’re unsure about the local market or located at some distance from it, it may be more difficult to find the people you need. If you’re looking for operators working the gig economy, you may encounter additional difficulty in bringing the right people on board.


The Challenges of the Gig Economy

As mentioned, it can be difficult for international firms to find and hire the right people for their day-to-day operations. Hiring someone for a special project or a limited period of time can be even more challenging. You may find it difficult to get people on board on short notice.

It can also be challenging to find the right people in the gig economy. If you’re not familiar with the local market, you may not know who’s considered the best or who to steer clear of. This can be compounded if you’re hiring in a hurry or need someone for a very particular window of time.

Since you may be hiring highly skilled people, the stakes can be even higher. The most talented may not be available or there may be relatively few people with the skills you need.


Work with a Canadian PEO

One solution to all of the challenges outlined is to work with a Canadian professional employer organization (PEO). They can help you find the right people when you need them.

How can a Canadian PEO help? First and foremost, they’re more familiar with the local market. They may be able to access the Vancouver job market or the Halifax job market more easily than you can. They may also have knowledge about who operates in which market. They may have worked with some of these people before and have trusted providers to turn to.

The PEO can also help expedite and ease the hiring process. In turn, hiring becomes much less stressful and far more streamlined. You can realize better hires in less time with a Canadian PEO. The professional employer organization can also take care of contractor payments for you.

If you need to tap into the gig economy in Canada, look no further than a Canadian PEO.


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Who Can Benefit from Using a PEO in Canada?

Posted by Anna Mastrandrea

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Jun 13, 2018 9:00:00 AM

Who_Can_Benefit_from_Using_a_PEO_in_CanadaThere are many benefits to working with a professional employer organization (PEO) in Canada. You may have heard of some of these advantages already. One question you may have had is whether or not your business can benefit from using a PEO in Canada.

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Working with a PEO is beneficial for many companies, but it isn’t always the right choice. Some companies will find their relationship with a Canadian PEO much more advantageous than others do. One thing is clear, however, and that’s many companies can and do benefit from working with Canadian PEOs.


What Is a PEO?

If you haven’t heard the term before, it’s best to start with a quick overview of what a professional employer organization does. A PEO works with your company to manage most aspects of your human resources in Canada. They’ll work closely with you to hire, dismiss, and manage employees.

The PEO may also be responsible for payroll, vacation pay, scheduling, leave management, and benefits administration for your employees. They’ll also assist with compliance monitoring. You’ll still retain control over internal policies pertaining to how your employees are treated, and the PEO works in partnership with you.


What Are the Benefits?

As mentioned, working with a PEO in Canada can have many benefits for businesses. They include better compliance, improved management of human capital, and better management of your payroll and associated taxes.

Essentially, working with a Canadian PEO reduces the amount of risk a business takes on and simplifies the process of employing Canadian workers. This kind of partnership can also save you time and reduce the costs associated with hiring and managing a Canadian workforce.


Who Can Benefit?

The next question you have, once you’ve reviewed what a PEO does and the benefits of working with one, is who can benefit from working with a PEO in Canada? It’s a legitimate question for any business owner or HR manager to ask. After all, working with a PEO isn’t necessarily the right move for any given business.

Many firms do benefit from working with Canadian PEOs. While some Canadian businesses benefit from working with a PEO in Canada, the companies that benefit the most are usually foreign firms with Canadian operations. Those businesses that are new to Canada, with relatively little experience and knowledge of the Canadian employment and payroll regime, stand to benefit most from this partnership.


Why Is It So Beneficial?

While Canadian companies can and do benefit from working with PEOs, they have a distinct advantage over their foreign competitors. They know the lay of the land when it comes to hiring and managing employees in Canada. While they still need to ensure they’re in compliance with the law and they’ll need to monitor changes, Canadian HR professionals tend to have better working knowledge of the system.

Working with a Canadian PEO is one way for international companies to gain access to that kind of expertise. While the HR professionals on staff at an American or British firm are talented and knowledgeable people, they likely don’t know employment legislation in Canada inside out.

This can lead to problems in compliance with employment legislation or trouble administering payroll. The payroll staff of a UK firm, for example, may not know which benefits the Canada Revenue Agency considers taxable. As a result, they may miscalculate the amount of tax your business owes. The CRA may reassess you and hand out a penalty. They might even decide to audit your business, a costly and time-consuming process.


Get the Expertise You Need

It should be clear why international companies stand to benefit from their relationship with a PEO in Canada. Getting the expertise you need to manage your Canadian workforce well is never a mistake. Talk to a PEO today and discover what they can do for you and your business.


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Topics: Professional Employer Organization

A Compliance Regulation Checklist for Canadian Payroll and HR

Posted by Shannon Dowdall

|

Jun 11, 2018 9:00:00 AM

A_Compliance_Regulation_Checklist_for_Canadian_Payroll_and_HRPayroll and HR compliance are important aspects of any business. This is certainly true whether you operate in Canada, the United States, or another country around the world.

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Compliance is, of course, a big job. The legislation governing businesses can be quite convoluted, and laws are always changing and evolving. Take a look at the employment legislation in Ontario and Alberta. Both provinces introduced sweeping changes in 2018. Quebec appears poised to follow suit.

Keeping on top of your compliance can thus be a tall task. Using this checklist designed for HR and payroll in Canada can help you get a leg up on your compliance activities.


Record-Keeping

The first thing you should do when considering your payroll and HR activities in Canada is set up good rules for your record-keeping. The Canada Revenue Agency (CRA) demands good record-keeping from all businesses operating within Canadian borders. In fact, the federal Ministry of Finance outlines exactly what it takes to keep good records.

Take a look at the Ministry’s guidelines. Is your business keeping records in line with the requirements? If not, what can you do to ensure good record-keeping takes place? You may decide to upgrade the technology you use or streamline a process.

What happens if the record-keeping requirements aren’t met? The penalties associated can become quite hefty. If the CRA ever audits your business, you’ll want to be sure you have your records in order.


CRA Payroll Withholding

Payroll has many nuances, which can make it tricky to maintain compliance with the regulations. Tax withholding is a particularly important aspect of payroll compliance. A Canadian payroll calculator can help you determine exactly how much you need to withhold.

You’ll also want to do some reading on the regulations around what qualifies as taxable income, including benefits. The Canadian payroll calculator can help you here as well. Be sure to use an up-to-date version, so that the latest rules and regulations are being applied.


Vacation Pay

Each province in Canada has its own regulations surrounding vacation pay. If you’re monitoring HR and payroll compliance, you’ll want to be sure you’re using the most up-to-date rules for calculating vacation and vacation pay in each province you operate and pay employees in.


Overtime and Shift Scheduling

As mentioned above, both Ontario and Alberta began the process of revising their employment legislation standards in 2017. The code revisions began to take effect in early 2018. Employers will want to pay particular attention to changes regarding overtime, overtime pay, and shift scheduling in both provinces.

This is an important aspect of payroll and HR compliance for businesses operating in any province to pay heed to. Just as Alberta and Ontario have both changed their laws pertaining to each of these subjects, so too do other provinces handle them differently.


Pay Equality, Pay Transparency, and Discrimination

Ontario became the first province in Canada to introduce pay transparency legislation. The province has had pay equality legislation on the books for some time now. Pay transparency is designed to strengthen pay equality by allowing employees to see what an employer pays each and every person.

Discrimination is another long-standing concern for businesses in Canada and Canadian governments alike. HR professionals will want to look at the regulations around anti-discrimination and anti-bias measures and ensure they’re complying. For example, there are certain interview questions you cannot ask during the hiring process. Check your own interview process and be sure to remove any of these questions.


Ongoing Monitoring

Perhaps the most important thing to do when it comes to compliance in payroll and HR in Canada is ensure you’re monitoring your compliance. As demonstrated by Ontario and Alberta, laws can and do change. Keeping an eye on what’s required of you and striving to go above the minimums set out in the law will help you maintain compliance.


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Topics: Compliance

Use Employer of Record Services for International Expansion

Posted by Corinne Camara

|

Jun 8, 2018 9:00:00 AM

You’re constantly looking Use-Employer-of-Record-Services-for-International-Expansion-compressorfor new ways to grow and expand your business. Perhaps you’ve considered reaching out to a new demographic, or maybe you’ve added a new product or service to your line up. Maybe you’ve considered expanding to a second location in the same town, the same state, or the same country.

Download "What Are You Leaving to Chance By Handling Payroll on Your Own" Guide

Now you’re thinking even bigger. You’re going to expand your business internationally. Whether this is your first international expansion or your fifteenth, you know the process will be challenging. You’ll need to conduct careful research and learn many new rules and laws. You’ll need to work with a variety of different partners, including new vendors, new suppliers, and potentially an employer of record.

What Is an EOR?

An employer of record is a business that supplies human resources services for another business. The name comes from the fact that the EOR acts as the employer of any employees the client business has. 

The employer of record provides most of the services an employer would, and they are legally recorded as the employees’ employer. They provide payroll, administer leaves and vacation pay, remit payroll taxes to the CRA, calculate and administer benefits, and even engage in hiring and termination on behalf of the international client company.

Why Use These Services?

One question you may have is why you would need to engage an EOR or use their services. After all, if you expand internationally, you’re going to set up shop in the destination country. You have your own HR department, and you can go about hiring and terminating employees as needed. After all, you do it just fine at home.

The issue here is the difference in the legal framework. An American firm is quite used to the payroll taxes and legislation set out by the US federal government and the IRS. In Canada, the rules are different, and the Canada Revenue Agency enforces them. 

The provincial governments also legislate on employment. Ontario, for example, just revised the law regarding leaves and vacations, as well as holiday pay for statutory holidays. The province of British Columbia changed how its healthcare provisions work, meaning employers who have opted in to the provincial system of insurance now pay and administer different fees. The rules are different again in Quebec, Alberta, and Nova Scotia.

It Ensures Compliance

International companies moving into Canada for the first time often aren’t as familiar with the law as they think they are. Even if you’ve operated in Canada before, legislative changes could mean what you once knew is no longer true.

Working with a partner who delivers employer of record services helps you ensure your business operations are compliant with the legislation, no matter how new or recently changed. It also means you don’t need to worry about the subtle differences between laws in BC and Alberta. The employer of record will be attuned to those differences.

This can save you both time and money. Your HR staff’s workload will be reduced significantly, as they won’t be required to learn Canadian law inside out in order to administer payroll or ensure the questions they’re asking in an interview are legal, for example. It can also reduce errors in your payroll as well as tax remittances to the CRA, which can save you from costly penalties and audits.

Selecting an Employer of Record

It should be clear just why these services are so important for businesses hoping to undergo an international expansion. In the simplest terms, it makes it easier for you to expand.

One of the biggest challenges for business owners is selecting an employer of record. Be sure to conduct some careful research and talk to several providers. Always consider what’s best for your business and how each provider will meet your needs. The right provider is out there.

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3 Obstacles That Derail American Business Expansion into Canada

Posted by Stacey Duggan

|

Jun 6, 2018 9:00:00 AM

3-Obstacles-That-Derail-American-Business-Expansion-into-Canada-compressorExpanding a business into Canada is an exciting move for an American business. Canada is often one of the first markets American businesses expand to. There are a number of good reasons for this. One is that Canada often represents a ready and waiting market. Other factors, such as shipping logistics, are also simplified between the US and Canada versus other markets.

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There are still challenges for American business expansion into Canada. As with any international expansion, you’ll need to do some careful research and proceed with caution. Educating yourself and your staff about the most common obstacles to American business expansion into Canada can help you achieve success more readily when you are ready to expand.

1. Underestimating the Cost of Doing Business

Perhaps the most common stumbling block for American business expansion is the cost of doing business in Canada. Quite simply put, the cost of doing business is higher in Canada. There are a number of factors that play into this. The first is often the exchange. Canadian prices are usually higher. Employment legislation may play into this, particularly where minimum wages are concerned. Ontario and Alberta are both set to have $15 per hour minimum wages in 2019. 

As the cost of paying employees increases, so too does the cost of purchasing goods. There are also other considerations. Canada is an enormous country geographically, but its population is concentrated on the US border and sparse elsewhere. The population is also much smaller than the US. The entire Canadian population is about equivalent to the state of California. As a result, it takes more money to get goods to scattered population centres. 

Taxes can also be higher, particularly employment and payroll taxes, which are used to support Canada’s social welfare programs such as Medicare, the Canada Pension Plan, and Employment Insurance. 

Many American firms underestimate the costs of doing business in Canada and soon find themselves exceeding their budgets on every item.

2. Expanding Too Quickly

Target has become something of a case study about how not to expand an American business into Canada. Target purchased many locations from the defunct Canadian discount brand Zellers. For years, many Canadians had been lobbying Target to come to Canada. Many Canadians made pilgrimages to Target locations in the US whenever they visited or if they lived close to the border. 

Target opened with much fanfare but couldn’t live up to expectations. Logistics made it difficult to get the products Canadians were used to seeing in US stores, and prices were much higher. Target ended up closing up shop quite quickly. 

Target made one other mistake. It opened about 100 stores across Canada in just under a year. That strained the budget and caused huge issues with shipping and inventory logistics. Other retailers, such as Lowe’s and Crate and Barrel, have expanded much more slowly and have been met with more success. 

American business expansion should follow the model of retailers like Crate and Barrel and Lowe’s. Slow and steady will win the race when it comes to business expansion in Canada.

3. Employment Legislation

Another obstacle for American business expansion into Canada is employment legislation. Not knowing the law around hiring, employing, paying, and terminating employees can cause a good deal of headaches for American firms. Even at home, employment legislation can cause trouble for your HR staff.

In Canada, employment legislation varies among provinces and encompasses everything from what kinds of questions you can ask in an interview to how much notice you need to give an employee when you terminate their employment.

If you want to avoid these stumbling blocks during your business expansion into Canada, consider getting help from an employer of record. They can assist you in making better decisions for your business.

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Topics: Business Expansion

5 Rules Every U.S. Business Owner Needs to Know about Paying Canadian Staff

Posted by Ray Gonder

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Jun 4, 2018 9:00:00 AM

5-Rules-Every-U.S.-Business-Owner-Needs-to-Know-about-Paying-Canadian-Staff-compressorMany U.S. business owners eventually end up hiring at least some Canadian staff. Whether you hire one employee to work for your American operations because they’re the absolute right fit or you have a number of Canadian employees working for your Canadian branch operations, you’ll end up paying Canadian employees.

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Many U.S. business owners believe paying Canadian staff is quite straightforward and simple. In many ways, it is. It can also be much more convoluted than you may anticipate at first glance. There are many things to know. Being familiar with the different legislation applicable in each province is a must. Here are five rules you’ll want to keep an eye on when you pay Canadian staff.

1. Keep Records

Perhaps the most important thing any U.S. business owner needs to know about paying their Canadian staff is the need to keep records. In Canada, record-keeping for your payroll is quite important. While you should be keeping records anyway, you’ll want to review the requirements for your payroll records in Canada. 

The requirements are set out by the Canadian government and administered by the Canada Revenue Agency (CRA). Failure to keep proper records can result in penalties and even criminal charges. Avoiding this situation is quite simple. Make sure your record-keeping is in good order and it should be smooth sailing.

2. Calculating Vacation Pay

Most Canadian provinces outline vacation requirements. In Ontario, for example, employees are entitled to paid vacation time. This is also true in Saskatchewan, but the amount of time and how pay is calculated is different in each province. 

U.S. business owners will want to pay particular attention to how vacation pay is calculated in each province they operate in, so they can ensure they calculate vacation pay correctly. Calculating vacation pay incorrectly could result in penalties.

3. Overtime Pay

Sometimes, an employee will end up working more than what’s considered full-time hours. At this point, they begin earning what’s known as overtime. U.S. business owners most definitely need to be familiar with the overtime pay rules for where their employees operate. BC, Ontario, and Manitoba define “full-time” and “part-time” hours differently, in addition to mandating slightly different ways of handling and calculating overtime pay. 

Overtime pay may also vary based on the industry or occupation, and additional regulations may govern certain professions. There may also be rules about how much time off an employee must have between shifts and so on. 

Knowing these rules will help you pay your Canadian staff correctly each time they work overtime. Knowledge of the rules can also help you avoid scheduling your staff for overtime unless you truly need to.

4. Payroll Taxes and Deductions

U.S. business owners are already familiar with the idea of payroll taxes and deductions. After all, you likely deduct from the pay of your American employees and remit to the IRS. In Canada, you’ll do the same thing, except you’ll need to follow Canadian payroll taxes and deductions rules. The remittances are sent to the Canada Revenue Agency. 

Canada has different deductions and taxes. Again, they vary by province, so you’ll want to read up on which deductions you need to make and how much tax to withhold.

5. Taxing Benefits

Which benefits are taxable benefits in Canada? If you’re a U.S. business owner offering Canadian staff any kind of benefits, you need to know. The CRA classifies particular benefits as taxable and non-taxable. Travel reimbursement and income earned from the sale of shares are considered taxable benefits, for example.

Get a Hand with Canadian Payroll

As most U.S. business owners already know, payroll isn’t always as straightforward as it seems at first glance. Canadian payroll can be even more complex. Get a helping hand by engaging a Canadian professional employer organization (PEO). They can help make payroll simple again.

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Topics: Payroll Processing

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