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Wondering How to Pay International Employees? Follow These 5 Steps

Posted by Stacey Duggan

|

Dec 13, 2017 9:00:00 AM

Wondering How to Pay International Employees Follow These 5 Steps--.jpgIf your business has gone international, it’s time to figure out how you’re going to pay your staff in other countries. Even if you’ve expanded from the US to Canada, there’s a number of steps you must take to ensure your business runs smoothly, your employees are paid on time, and it’s all in compliance with international regulations.

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In terms of paying international staff members, knowing where to start can be tricky. If you’re wondering how to pay international employees, here are some of the steps you must follow.

1. Register Your Business in Both Countries

Depending on where your business has expanded, it’s an essential first step to register your business in both countries. This is the easiest way to create a smooth transition and ensure your employees are being paid properly.

Even if you’re a Canadian business that’s moved South, it’s still important for you to register your business in both countries. Regardless of whether it’s a big expansion or a small one, it’s a simple first step that will create benefits down the road. Plus, for the most part, registering your business in another country is as easy as registering it in your own.

2. Do Some Research

Before you even think about how to pay international employees, you must research the country’s rules and nuances surrounding payroll. For instances, in some countries, it’s expected that employees be paid monthly rather than bi-weekly. In others, overtime pay is rare or restricted by law.

It’s always best to do research or consult experts before you jump into hiring and paying an international employee.

3. Consider Exchange Rates

If you’re planning a trip overseas, you’re definitely going to consider exchange rates. The same thing applies when you’re hiring and paying an international employee.

As you learn how to pay international employees, having a clear outlook of exchange rates is crucial. It would be wise to have an understanding of your budget and how much you can spend on a new employee, and then factor exchange rates into the equation.

As exchange rates begin to fluctuate, you may find yourself going over or under budget due to an international hire. One of the easiest ways around this is paying your international employees in your own currency. So if you’re an American business that’s hired an employee in Canada, paying them US dollars can reduce complications, as long as you’ve considered the policies and rules that are involved.

4. Classify Them Properly

If you want to avoid trouble when hiring an international employee, do the research and make sure they’re classified properly. It might be easier to claim all international employees are independent contractors so you can just cut a cheque and avoid payroll and tax legislature, but if you do so, you run the risk of having the CRA, the IRS, or a dozen other international organizations penalize you.

Just as you would with a seasonal employee, double check which employee classification regulations you must abide by in terms of paying international workers properly.

In the long run, when you don’t run into trouble, you’ll be glad you took the extra time to classify them properly.

5. Get Professional Help

While it might sound easy, knowing how to pay an international employee is difficult. With varying laws and fluctuating exchange rates, managing payroll can become quite the burden.

To make the process easier and to give you peace of mind, consider reaching out to a payroll service provider. When you outsource payroll, you can rest easy knowing your employees are being paid efficiently and within the laws of the country you’ve expanded to.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

How Payroll Companies in Canada Benefit Foreign Businesses

Posted by Karen McMullen

|

Dec 11, 2017 9:00:00 AM

How Payroll Companies in Canada Benefit Foreign Businesses---1.jpgAs one of the most important aspects of any business, proper payroll management is an absolute must. However, things do tend to get a little complicated when businesses expand into other countries with different payroll, taxation, and hiring regulations. If handled improperly, your business could find itself in some serious hot water.

For any business that’s expanding into the Great White North, working with one of the payroll companies in Canada is one of the smartest investments you could make.

Download our free guide on what US companies need to know about paying  employees in Canada.

Not sure why? Here are some of the key ways payroll companies in Canada benefit foreign businesses.

You’re Working with Experts

For the most part, the basic administration of payroll is the same week after week. However, when you expand into another country, things get complicated. While you may think you’re prepared to handle payroll internally, you’ll soon find yourself stressed learning new rules and keeping up with changing regulations. That’s why it’s best to trust the experts.

When you outsource payroll to a payroll company in Canada, you’re working with experts who have years of experience when it comes to foreign countries and Canada’s payroll system. No situation is too complex and you can rest easy knowing your workforce is being paid accurately, on time, and in compliance with Canadian laws.

You’re Reducing Risks

When foreign countries try to handle Canadian payroll on their own, the room for error increases dramatically. For instance, misclassifying an employee as an independent contractor can leave your business at risk of some hefty fines, even if the incident was entirely accidental. Unless someone on your staff has a wide knowledge of Canadian payroll regulations, handling payroll on your own can be a serious gamble.

Payroll companies in Canada eliminate these risks and allow you to focus on your core work—not the stressors of improper payroll management. From properly classifying employees to year-end tax reporting, your business will always be in compliance with government laws and you won’t run into any surprise fines down the road.

Because there are so many payroll mistakes that can be made, outsourcing payroll is almost always the best option. 

You’re Covered All across Canada

Expanding your business into Canada is an interesting journey. Not only are you entering a new country, but you’re also working in a new province. Maybe you’re even in a few different provinces!

To make payroll even more complicated, each province or territory in Canada has a number of different regulations that make payroll different from place to place. For instance, vacation pay in Canada is typically four percent while Saskatchewan pays six percent. Knowing each province’s rules is important for any company that’s expanding across Canada.

When you work with a Canadian payroll company, you’re covered no matter which province you’re expanding into. Not only are you covered for your initial expansion, but as your business grows, you’ll continue to be covered as you conquer new ground in different provinces. Instead of trying to keep up with each province’s rules yourself, sit back and let a professional payroll company handle it for you.

You’re Able to Focus on What’s Important

Taking care of payroll administration on your own is a massive undertaking. From managing vacation time and taxes to making sure everything is submitted accurately and on time, you could easily find yourself spending hours each week keeping everything on track.

For the sake of your business and its success, allocate your time to more important duties by outsourcing payroll.

Don’t waste time trying to handle everything all on your own—with the help of payroll professionals, your payroll will be handled so your time is free to be invested back into your business.

Don’t leave payroll to chance. Working with payroll companies in Canada offers your business the resources it needs to expand without any hiccups.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Processing

Prioritize These 6 Traits When Seeking Payroll Companies in Canada

Posted by Corinne Camara

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Dec 8, 2017 9:00:00 AM

Prioritize These 6 Traits When Seeking Payroll Companies in Canada--.jpgSo you’ve made the decision to outsource payroll—that’s a great move! But now you’re left to embark on the journey of finding the right payroll company for your business. Where do you start? How do you know what to look for?

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Before you panic, know this: Finding the right payroll company is easy, but only if you know what to look for. These are the six traits you should prioritize when seeking out payroll companies in Canada.

1. Expertise and Experience

To ensure you’re getting the best service possible, you should start by looking for payroll companies in Canada that have years of experience. While experience doesn’t always mean expertise, these two traits often follow one another.

While a newer and less experienced company may offer you a better deal, you’ll end up losing down the road when it doesn’t fully comply with Canadian laws, fails to submit remittances on time, or makes other critical errors. Prioritize expertise and experience with your payroll service provider and you’ll experience nothing but smooth sailing.

2. All-in-One Inclusivity

There’s a reason business owners prioritize “all-in-one” service when it comes to payroll providers: Everything they need is under the same roof, for a better price. As your business grows and your needs change, if your payroll partner doesn’t offer all-in-one services, your bill is going to grow a lot faster than you anticipated. Each and every new need will have an additional cost. When everything in terms of HR and payroll is handled together right from the start, everything your business needs as you begin to grow is covered.

3. All Remittances Are Covered

If a company claims to cover all remittances, be prepared to ask questions. The best payroll companies in Canada will cover all remittances; however. some companies make this statement and then don’t provide the coverage. 

In fact, some will charge extra for remittances they once claimed were covered. Before signing any contracts, read the fine print and ask the right questions. Of course, you want payroll tax covered, but you also want coverage on workers compensation and any other provincial taxes that come into play. The right company will offer coverage, so never be afraid to ask for specifics.

4. Great Customer Service

As cliché as it sounds, your payroll provider is going to become your greatest business ally. And so, great customer service should always be at the top of the checklist. Anytime you have a question or concern regarding payroll or HR, they’re who you’re going to call. 

You want them to be ready and able to answer questions, not tied up and slow to respond. For the sake of your business, do your own research before making a decision and make sure previous customers have nothing but great things to say.

5. Knows Your Country of Expansion

If you’re expanding into Canada, your payroll service provider must be an expert in Canadian payroll rules and regulations. If not, you’re leaving a lot to chance in terms of compliance and accuracy. 

Payroll companies in Canada will always have more experience than a provider from a different country when you’re expanding in the Great White North. Choosing to work with a Canadian company is always your best bet. Otherwise, you could end up in some trouble come tax time.

6. Helps You Get Started

With these traits at the top of your wish list, it’s time to find your business the right payroll service provider! One last trait to prioritize is a company that makes getting started easy. Pick up the phone or visit their website to get your questions answered and get the process started—the right company will make the process easy and enjoyable.

What US Companies Need to Know about Paying Employees in Canada

Topics: Payroll Processing

2017 Holiday Preparation: Vacation Policies in Canada

Posted by Corinne Camara

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Dec 6, 2017 9:00:00 AM

2017 Holiday Preparation Vacation Policies in Canada--.jpgVacation policies in Canada are not as straightforward as you may think. Each province has different rules and regulations regarding how much vacation time and pay each employee is permitted to take and when they can take it. With dozens of regulations, it’s only fair that companies find themselves a little confused, especially companies that are based in the United States.

To prepare for upcoming vacation requests, brush up on vacation policies in Canada. Keep reading to see some of the more common vacation policy questions and their simplified answers.

Download our free guide on what US companies need to know about paying  employees in Canada.

How Much Vacation Time Are Employees Entitled To?

Starting with the basics—every employee in Canada is entitled to vacation time after working for a company for 12 consecutive months. After one year, employers must grant employees two weeks’ vacation, apart from Saskatchewan, which offers three weeks, and Quebec, which offers one day per month.

This, however, is the minimum amount as described in the employment standards legislation of each province. Companies can offer employees more if they wish.

There are exceptions for students in work-experience programs, federal employees, and some other employees.

Can You Relinquish Vacation Time?

Employers have the right to schedule vacation time according to an employee’s entitlement year or stub period. This ensures all employees are given the appropriate amount of vacation time. 

However, employees can give up vacation time with the employer’s agreement and the Director of Employment Standards written approval. It’s important to note that while employees can give up vacation time, employers are still obligated to pay the employee vacation pay.

How Much Vacation Pay Are Employees Entitled To?

When it comes to vacation policies in Canada, employees are to be given at least four percent of the gross wages earned in the 12-month vacation entitlement year. 

For example, if you earned gross wages of $16,000, you are entitled to $640 as your vacation pay. However, some companies offer competitive vacation benefits at a higher percentage than the minimum four percent.

What Happens to Vacation Pay after Employment Ends?

If an employee quits or is terminated, they are still entitled to be paid vacation pay. The employee must be paid any vacation pay that has not yet been paid out, including pay from the previous vacation entitlement year. This unpaid vacation pay must be paid to the employee within seven days of the employment ending or on the employee’s final pay stub—whichever is later. 

Outsourcing payroll and HR services is a great way to ensure your vacation pay is tracked, reducing the amount of risk your company faces regarding vacation policies in Canada.

Why Should Employees Use Their Vacation Time?

Recent studies suggest that more than 41 million vacation days are left unused by Canadians each year. Fiscally, that adds up to approximately $6.3 billion in unused paid time off. In the US, the number jumps to a whopping $52.4 billion. Many employees don’t understand the benefits of taking time off, leaving it up to employers to ensure their employees understand what it means for them and why it’s important. 

A study suggests that employees who leave 11 to 15 PTO days unused are 6.5 percent less likely to receive a raise or bonus than those who used their time off. On the other hand, taking even two days off can leave the mind and body refreshed, creating a more positive mindset and increasing productivity. 

For both employers and staff, vacation days are important. Keeping track of vacation policies in Canada can make a huge difference in the well-being of your employees and the quality of work they bring to the office every day.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Compliance

A Guide to Understanding Canadian Payroll Tax Regulations

Posted by Ray Gonder

|

Dec 4, 2017 9:00:00 AM

A Guide to Understanding Canadian Payroll Tax Regulations--.jpgUnderstanding Canadian payroll tax regulations can be tricky. Whether you’re operating a small business, expanding your operations into another province, or expanding into Canada from another country, you need to understand the nuance of these regulations. 

The good news is it doesn’t need to be difficult to understand the tax regulations around payroll in Canada. This guide is here to help.

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The Legal Framework

The first key to understanding Canadian payroll tax regulations is to understand the legal framework around the regulations. 

In Canada, two separate levels of government deal with payroll. The federal government legislates on national taxation levels and employment standards for federal employees. The federal government also governs social programs like the Canada Pension Plan and Employment Insurance. 

The provinces also get in on legislating employment, payroll, and taxation. Each province has its own rules covering minimum wages, vacation time, and more. They also differ in terms of income tax. In the case of Quebec, the province manages its own pension plan, the Quebec Pension Plan (QPP).

The Governing Body

Although the provinces have their own legislation regarding payroll tax regulations, the national Canada Revenue Agency (CRA) is responsible for administrating the regulations. The CRA collects all tax returns, assesses them, conducts audits, and penalizes those who have submitted erroneous or fraudulent returns. 

The CRA has the power to initiate an audit if it suspects your payroll practices aren’t on par. It can also fine you for violating the payroll tax regulations.

What Kinds of Regulations?

Understanding Canadian payroll tax regulations also entails understanding what kinds of regulations there are.

For the most part, the regulations declare how you should calculate your tax withholdings and returns to the CRA. For example, the CRA publishes handy tables to calculate CPP withholdings from an employee’s pay. The tables are based on current rates and take into consideration where the employee works, their status as part time or full time, and the industry and type of work.

The regulations also discuss the penalties for violating the regulations. In most cases, the penalty for breaking a rule is a fine. The fines can get quite hefty, so it’s best to avoid them.

Resources

Understanding Canadian payroll tax regulations is easier than ever. There are many helpful internet resources you can use to further your knowledge and understanding on this subject.

The CRA’s own website is one of the most important and best resources available. The website contains plenty of explanatory information about what you need to collect, how to calculate and submit your return, and even information about what might happen if you break the rules.

Legal documents, such as the text of laws themselves, are freely available. They can be difficult to read, so you also might look for interpretations offered by qualified and expert legal teams.

Your Canadian payroll services provider is another reliable source of information. Many providers offer helpful tools, such as blogs and whitepapers, which are chockfull of great information. If you need more help or have another question, you can always talk to them too!

Summing Up

Understanding Canadian payroll tax regulations doesn’t need to be difficult. In fact, with great resources from the CRA and your Canadian payroll services provider, it’s quite easy!

Always be sure to check the regulations pertaining to the provinces and territories you’re operating in. Doing so will tell you which laws you need to pay attention to. The legal framework governs what employers need to do when it comes to payroll.

Remember about the CPP and EI, as well as taxable benefits. If you’re not sure, look something up. There are many calculator tools available to help. Your payroll services provider may provide one. Its experts are ready to help you better understand Canadian payroll and the tax regulations surrounding it.

7 Signs It's Time to Outsource Payroll

Topics: Compliance

Need to Figure out Canadian Payroll Deductions? How a Calculator Can Help

Posted by Karen McMullen

|

Dec 1, 2017 9:00:00 AM

Need to Figure out Canadian Payroll Deductions How a Calculator Can Help--.jpgCanadian payroll deductions are an important aspect of your business. After all, you need to properly calculate them to avoid running into trouble with the Canada Revenue Agency (CRA) later on down the line. 

Figuring out deductions can be a bit of a task. There are many different factors you need to take into account. It can sometimes seem a bit too complicated! If you’re feeling overwhelmed, don’t fret. There are many tools to help you.

Download our free guide on what US companies need to know about paying  employees in Canada.

Different Province, Different Rules

One of the biggest problems in figuring out Canadian payroll deductions is posed by location. Different provinces have all sorts of different rules pertaining to payroll deductions. While you might be able to calculate deductions for the Canadian Pension Plan and Employment Insurance easily, everything else might be up in the air. 

Even calculations for CPP and EI aren’t a given either! Different provinces have different costs of living, which get factored into CPP and EI calculations. Income tax also varies among provinces. Vacation time and other entitlements are calculated differently among provinces as well. 

The long and short of it is you need to know the rules and regulations governing each province your business operates in.

Different Employees, Different Rules

Another factor complicating payroll deductions can be the status of your employees. Calculations for CPP, income tax, EI, and even vacation time can differ not only based on where you operate but by employee too. 

Calculations for a full-time employee are likely going to be different than a seasonal employee. The employee’s length of service might also come into play, as it does when you’re calculating vacation pay in Quebec and Saskatchewan.

Getting a Helping Hand

With so much variation in Canadian payroll deductions, it’s little wonder so many employers feel they need help figuring out what they need to deduct and when. While your best bet is to team up with a Canadian payroll services provider, not every employer has the budget for that.

Even if you do work with a service provider, you might want to better understand Canadian payroll. Being able to calculate things yourself can give you a rough idea of the situation. It can also help you understand the figures your service provider submits.

In these situations, a deductions calculator can be your best friend.

What Does a Calculator Do?

You might be imagining a simple handheld calculator and wondering how it can help you figure out deductions. While this might help you, an online calculator tool programmed specifically to figure out Canadian payroll deductions is a safer bet.

These tools are available from several different sources. Most of them are free. The CRA offers one on its website. Your payroll services provider might also offer you one to use for free.

The purpose of these calculators is to help you process payroll correctly. While you’re still responsible for the accuracy of the information, they can help you understand and figure out Canadian payroll deductions in short order.

How Do They Work?

Most calculators are online tools programmed with the latest rates and information for different provinces. To use one, you’ll need to fill in some information about the company and the employee. You’ll likely be asked where the employee is located, what their employment status is, and even how long they’ve been working with you.

You’ll also need to give information about the employee’s wage and earnings. More sophisticated calculators might also require benefits information.

Once this information has been inputted, the calculator can calculate your Canadian payroll deductions.

No Replacement for Professionals

Calculators can be very useful tools! They’re still no replacements for professional advice and expertise. While they can give you a good estimation of your Canadian payroll deductions, these tools are only as good as their programming. Additional information can sometimes change the picture.

If you need a helping hand with your payroll, talking to a Canadian payroll service provider is your best bet.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

How Does Vacation Pay in Saskatchewan Affect Payroll Processing?

Posted by Corinne Camara

|

Nov 29, 2017 9:00:00 AM

How Does Vacation Pay in Saskatchewan Affect Payroll Processing--.jpgVacation pay affects your payroll processing. This is true of almost any jurisdiction you operate in, including different states and provinces, and even different countries. 

In Canada, the provinces have final say over how vacation pay is to be tabulated and disbursed to employees. Quebec, for example, has some unique rules about how much vacation time employees are entitled to and how much pay they receive. Ontario’s rules are different, as are BC’s and Alberta’s. 

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What about Saskatchewan? Vacation pay is different there yet again.

Who’s Eligible?

Vacation entitlements and pay are governed by the Saskatchewan Employment Act. If your employees are governed by the Act, then they’re likely entitled to annual vacation pay. 

Employees who work more than one year with you are entitled to vacation pay. For the first ten years, the amount of vacation time they’re entitled to remains the same. If an employee is with you longer than ten years, they earn more time off. 

This applies equally to full-time and part-time employees. It may also include some employees who have taken a break in their employment. The employee must still be employed with you for 52 weeks (a year) or more, but they only have to work 26 consecutive weeks. 

This would include an employee who worked 26 weeks beginning in January but was laid off in July. In September, they resume working for you. Since they work through to January of the following year, they’re entitled to vacation pay.

Calculating Vacation Pay

The Act also lays out how vacation pay in Saskatchewan should be calculated. Employers have two options. One is for employees who take their vacation entitlement. The other is for those who don’t take vacation. 

During the first nine years of employment, the calculation is 3/52 (approximately six percent) of the employee’s annual salary. You must also calculate vacation pay on the vacation pay at the same rate! Any commissions, overtime, or bonuses paid also need to be included in the calculation. 

After ten years of employment, employees earn 3/42 of their annual salaries, plus commissions, bonuses, overtime, or other earnings. This is about eight percent.

Paying Vacation Pay

The Act allows employers and employees to decide how vacation pay in Saskatchewan will be paid. There are two options.

Since vacation pay is a percentage of the employee’s annual wages, the employer can opt to pay vacation pay in one lump sum when the employee takes their vacation. This is designed to replace the employee’s “lost” wages for going on holiday. An employee who earns $15,000 and a $3,000 commission for the year would be entitled to $865.38 for vacation pay.

The other option is to disburse vacation pay on each paycheque. Vacation pay is calculated in the same way, only as a percentage of the wages on each paycheque.

Employees taking vacation and those not taking vacation can request their employer pay either way. Some employers may prefer to use the lump sum payment. Others may prefer to use the paycheque method since it more readily allows for fluctuations in overtime, bonuses, and commissions.

Termination

Employees who are terminated or quit should receive vacation pay on their final paycheques. If you calculate vacation pay per pay period, then you’ll pay out only the amount tallied on the final pay. If you pay vacation as a lump sum, however, you’ll need to pay out the full amount.

It’s important to note employees who haven’t yet completed 52 weeks with you are entitled to vacation pay when they quit or are terminated.

If you’re having trouble getting payroll just right or you have questions about vacation pay in Saskatchewan, there are many tools to help. Asking your payroll services provider is also a good strategy!

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Processing

What You Can Learn from the Phoenix Payroll Scandal

Posted by Karen McMullen

|

Nov 27, 2017 9:00:00 AM

What You Can Learn from the Phoenix Payroll Scandal--.jpgYou’ve seen it on the news or read it in the papers: The Phoenix payroll scandal has left thousands of Canadian public servants underpaid, overpaid, or in many cases—not paid at all. The situation has made news headlines all over the world, highlighting the true importance of secure payroll systems and the effect it can have on the working population.

Download our free guide on what US companies need to know about paying  employees in Canada.

Don’t let it scare you. Systems and companies are in place that offer efficient and reliable payroll services, saving hundreds of businesses the trouble that Phoenix has left on the Canadian government. At the end of the day, there are things one can take away from the Phoenix payroll debacle.

What Happened?

Since its launch in February of 2016, the Phoenix payroll system has left over 50,000 public servants in precarious situations, living without paycheques or sorting out the issues surrounding overpay. The automated self-serve payroll program was intended to save the Canadian government $70 million per year processing payments for over 300,000 federal employees. However, it has now racked up $140 million in overpayments, frustrating taxpayers and leaving thousands of Canadians with more questions than answers.  

From reports of foreclosure and maxed out credit cards to selling beloved household treasures, affected citizens are doing whatever it takes to keep themselves and their families afloat, even if that means putting themselves in serious despair.

While the government did announce a $140-million funding reallocation strategy at the beginning of 2017, too many Canadians are left playing the waiting game, with claims taking up to 10 months to be heard and addressed.

What Can We Learn?

As headlines continue to pop up across the country and more stories of desperation come forward, you might find yourself asking what you can learn from such a situation. Business owners all across Canada (and perhaps the world) are wondering how they can avoid such a situation within their own businesses. Is there anything we can take away from this alarming situation?

1. Automation Is Still King:
While automated systems can have glitches, handling payroll on your own continues to create more risks. From late submissions to overlooking overtime pay, there are more places errors can occur when you handle payroll on your own. Look for an automated payroll provider that has impeccable customer reviews, superb customer service, and a history that’s free of major errors or concerns. The Phoenix payroll scandal may have you thinking payroll should be handled manually, but with the right automated service, you can reduce risks and save time.

  1. Address Concerns Immediately:
    If an error does arise, you can be sure an employee will bring it to your attention as soon as possible. Looking into and addressing these concerns with haste allows you to get to the bottom of the issue and prevent it from occurring again. If an error has occurred with one paycheque, it may have occurred on another. Your employees rely on you for accurate payroll. Be vigilant and don’t let them down.
  2. Consider Outsourcing Payroll:
    Payroll is complicated. It’s safe to admit it! As your business grows and your needs change, you might find payroll falling to the backburner. While this is both unfair to your employees and risky for your business, outsourcing payroll has become a reliable option for many businesses. Leaving payroll in the hands of trusted professionals let’s you focus on other aspects of business while knowing your employees are properly taken care of.

Don’t become fearful of payroll. While it can be complicated and the risks seem high, with the right resources, you can easily avoid issues like the Phoenix payroll scandal.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing

How to Calculate Canadian Payroll Deductions

Posted by Anna Mastrandrea

|

Nov 24, 2017 9:00:00 AM

How to Calculate Canadian Payroll Deductions--.jpgCalculating Canadian payroll deductions is no small task. What seems like it should be relatively straightforward can actually be a complicated process. It doesn’t need to be difficult, however, so long as you keep a few things in mind. 

Follow these simple steps for calculating Canadian payroll deductions.

Know the Variables

The first step in calculating Canadian payroll deductions is to know your variables. Different provinces in Canada have different rules when it comes to income taxes, Canadian Pension Plan premiums and Employment Insurance contributions, and even vacation entitlements. Quebec and Saskatchewan do things differently than Alberta and Ontario. 

Download our free guide on what US companies need to know about paying  employees in Canada.

Another variable you need to consider is the employment status of the person you’re paying. Most provinces calculate different deductions for workers based on their classification as full time, part time, or seasonal. 

Once you have this knowledge in hand, you’re prepared to begin your calculations.

Know the Rules

One other quick tip before you get started on calculating your payroll deductions: Know the rules. As already mentioned, rules in Canada vary from province to province and by employee classification. 

There are other rules you’ll want to be aware of. Recently, the Canada Revenue Agency and the federal government caused a stir when it was revealed employee discounts were now to be considered “taxable benefits.” If you offer your employees any kind of benefit, you’ll want to know if it’s considered taxable or not. 

Knowing rules like these helps you make more accurate calculations. The more accurate your calculations, the fewer problems you’ll have later on.

Using a Calculator

Computers and the internet have gifted us many different tools. For those trying to figure out Canadian payroll deductions, one of the greatest tools available is the deductions calculator.

You can find Canadian payroll deduction calculators in many different places. The CRA offers a free one on its website. Your Canadian payroll service provider may also offer one. These tools are available for free. They have different levels of sophistication. Some will be more up to date and accurate than others. Always look for a calculator using the latest rate information.

To calculate your deductions, plug in the information the calculator requires. The more information you can provide, the more accurate the calculation will be. Keep in mind not all calculators account for every nuance of payroll. Some, for example, won’t factor in taxable benefits at all. Ultimately, you are responsible for the accuracy of the deductions.

Get a Helping Hand

A deductions calculator is a great tool, but it has its limitations.

Depending on the sophistication of the calculator and the number of variables it factors in, its sums will be more or less accurate. If you have information the calculator didn’t allow you to input, you’ll need to consult with the professionals.

A PEO or Canadian payroll services provider can help you straighten out your books, ensure accuracy in payroll, and help you avoid fines and penalties.

Understanding Canadian payroll deductions is still a great skill, but teaming up with a provider can help you shore up your payroll.

Still Have Questions?

Maybe you used a calculator tool, but you’re unsure of how accurate its calculations are. You might just feel like something is “off” about the number.

Even if you did use the calculator and got an accurate calculation, you may still have questions about Canadian payroll deductions! Don’t be afraid to reach out to a payroll services provider and get the answers you’re looking for.

Calculating Canadian payroll deductions doesn’t need to be difficult. In fact, following these steps make it a lot easier!

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

How Is Your Payroll Affected by Employing a Canadian?

Posted by Stacey Duggan

|

Nov 22, 2017 9:00:00 AM

How Is Your Payroll Affected by Employing a Canadian--.jpgDo you operate a branch office in Canada? Are you thinking about opening a Canadian subsidiary? Maybe you just finished acquiring a Canadian firm. Any of these situations could leave you wondering, “How does employing a Canadian affect my payroll?” 

It’s a good question to ask! Preparing payroll in Canada isn’t necessarily hard, but it is different. A nuanced understanding will help you avoid mistakes.

Download our free guide on what US companies need to know about paying  employees in Canada.

Two Levels of Government

Employment standards and taxation are handled at two levels of government in Canada. Both the federal and provincial governments are involved in regulating how payroll is conducted. 

Federal employment standards only apply to federal employees, who make up about ten percent of the workforce. The other 90 percent of Canadian employees are covered by provincial legislation. 

Provincial legislation covers topics like vacation pay, minimum wage, and shift lengths. Federal legislation is more important when it comes to social programs such as the Canadian Pension Plan and Employment Insurance.

Where Do You Operate?

Different provinces have different legislation pertaining to payroll, so you first need to figure out what legislation applies to your operations. You’re employing a Canadian, but where do they work? You’ll need different calculations if they work in Montreal than if they work in Saskatoon. 

Once you’ve determined the legislation

x cvoverning your operations, you can begin calculating payroll.

What You Need to Consider

In all provinces and territories, businesses employing a Canadian will need to consider calculations for CPP and EI. You’ll also need to calculate and set aside federal income tax for your employees as well.

Next, you’ll turn your attention to provincial withholdings. Most provinces also assess income tax. Income tax brackets range from as little as four percent for the lowest earners in Nunavut to 21 percent for high earners in Nova Scotia!

The provinces also lay down the law when it comes to vacation pay, leaves of absence, parental leaves, and other types of paid and unpaid leaves.

The federal government also regulates what is considered a “taxable benefit.” This definition is shifting, so be sure to check. Employers commonly misunderstand what is a taxable benefit and what’s not. Avoid any trouble by double-checking.

The Role of the CRA

The Canada Revenue Agency (CRA) is the governing body for almost all tax- and payroll-related issues in Canada. You’ll submit your tax return to the CRA for both provincial and federal taxes and calculations.

The CRA assesses your return and determines if it’s accurate. It’ll also assess any penalties if you’ve submitted an erroneous return. It also has the power to audit your business operations in Canada.

The CRA offers many tools for employers to avoid tax penalties related to payroll. Not only do they explain the payroll tax regulations in Canada, they also provide tools such as calculators designed to help you calculate your return correctly.

Getting Help

If you need help with payroll because you’re employing a Canadian, don’t worry. There are many free tools designed to help you calculate your withholdings. The CRA itself is a good resource, as already mentioned.

Other resources exist. A Canadian payroll service provider may be your best bet. Some offer free resources to help you understand how employing a Canadian could affect your payroll. You could also team up with them to ensure payroll is done right.

Getting Things Right

If you’re employing a Canadian, you’ve taken the first major step by asking how this affects your payroll. The next step is making sure you use this knowledge to good effect. Discover more about your obligations as an employer.

If you’re still having trouble with payroll calculations, consider employing a Canadian payroll services provider. They know the ins and outs of payroll in Canada, and they’d be more than happy to help.

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Topics: Business Expansion

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