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Calling Businesses in Canada: Payroll Audit Fines & How to Avoid Them

Posted by Stacey Duggan

|

Oct 9, 2017 9:00:00 AM

Calling Businesses in Canada Payroll Audit Fines & How to Avoid Them--.jpgYou’ve been selected for a payroll audit. It’s not exactly pleasant news, and few business owners want to hear it. Yet, provided you’re doing everything on the up and up, an audit shouldn’t have you too strung out. Yes, it’s additional work, but you’re on the right side of the law. 

For many Canadian business owners, however, audits often leave them with a few payroll audit fines for things they didn’t even know they weren’t supposed to be doing. Here are some of the common payroll audit fines and how you can avoid them.

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

Unreported Payments

The CRA is very concerned about the underground economy in Canada, and one of their goals is to eliminate it. It’s easy to see why: Workers paid “under the table” rarely pay income tax on their wages. For businesses, there’s incentive to pay people above board, such as writing off the expense, but there’s equal incentive to pay people and keep it off the books. 

If you’ve been paying individual workers under the table for their services, you could end up paying costly fines if your payroll is audited. Instead, keep everything above board. There’s one major advantage for you in doing this: You can write off these payments against your taxes.

Improper Reporting of Securities and Stock Options

Employees aren’t taxed for securities or stock options until they exercise or dispose of the option. You, as the employer, however, need to be keeping track of employee stock options and reporting on them. If you don’t, you could end up paying fines for improperly reporting this information.

Reclassifying Employees

You’ve probably heard about businesses firing people, only to rehire them, often at a lower wage. Another common practice is to fire someone, then hire them to perform similar or the same services as a contractor. 

The CRA frowns on this. The act of firing and rehiring may be enough to initiate an audit in the first place. If the CRA finds the rehired worker is conducting similar work in the same or a similar workspace, they’re likely to fine you. 

Avoid this by ensuring you use proper contracts and have the worker agree to all of the clauses laid out therein.

Personal Expenses

Some employers in Canada offer their employees additional “perks,” such as reimbursement for living expenses. The CRA sometimes finds these perks taxable, pensionable, and insurable. If that’s the case, you might be accused of hidden remuneration. 

Avoid fines on this front simply by reporting your employees’ personal expenses, if you offer this perk.

Failure to Maintain Records

This is a particular danger for small business owners: The CRA may cite you for failure to provide or maintain adequate records. You may be struggling to keep the books yourself, or you may have passed the duty to someone else. 

While inadequate bookkeeping is unlikely to sink your business, it could result in a request for compliance from the CRA and a fine of up to $1,000. 

The biggest problem is usually business owners who believe they have proper bookkeeping, but may not have kept records in accordance with the Income Tax Act. If the bookkeeping hasn’t been up to snuff, the CRA may find additional problems during an audit, resulting in more payroll audit fines for the business. 

The solution? Hire someone to keep the books properly! Many services are much more affordable then you think they are. Getting expert help in simply keeping proper records can help you avoid many of the payroll audit fines you’re likely to encounter.

Getting Help

Partnering with a payroll services provider can help you avoid many of the payroll audit fines in Canada. They know the ins and outs of the law and the best practices to keep you on the up and up.

7 Signs It's Time to Outsource Payroll

Make Sure You Know These 5 Audit Issues

Posted by Stacey Duggan

|

Oct 6, 2017 9:00:00 AM

Make Sure You Know These 5 Audit Issues--.jpgWhether you’re managing it in-house or working with a PEO company, the importance of managing payroll correctly isn’t lost on you. 

Yet many companies still struggle. This is especially apparent when tax time comes along and the CRA selects you for a payroll audit. Keep these five issues in mind during the entire payroll process to help prevent an audit.

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

1. Salary Expenses

Salary expenses are among the most common infractions the CRA looks for when it conducts an audit. You might think this is the easiest factor to get right, yet many businesses get nailed on it. 

Why? It seems simple enough: You pay your employees, you note it down on their T4s, and you call it a day. But some businesses forget about bonuses, commissions, and cash payments made to employees, so they don’t go through payroll properly. Other businesses purposely leave these items off the payroll, in effect paying employees “under the table.” 

The CRA is very concerned with the underground labour market in Canada, so you can bet it’ll be watching for irregularities relating to payments.

2. Shareholder Benefits

Shareholder benefits are often incorrectly reported or calculated. Part of the problem is the misunderstanding between accounts payable and human capital managers. They might be on different pages about how shareholder benefits should be handled! 

The best thing you can do to avoid audit issues related to the calculation of shareholder benefits is to check out the CRA’s website. The agency provides exact guidelines about when to report shareholder benefits and how to calculate them. 

Of course, if you don’t follow the CRA’s guidelines, they’re going to find out when they audit you. It’s better to play it safe.

3. Director Fees

Another sticking point is director fees. There’s often confusion about when and how to calculate director fees. Most of the time, these fees aren’t insurable, but in some circumstances, they are taxable and pensionable.

Much of it depends on how directors are selected in your company and the benefits bestowed on them. Some directors are elected while others are appointed. Some are entitled to a stipend. Different situations mean different rules when it comes to paying and reporting these fees.

Again, the CRA’s website lays down the law, so use its guidance to avoid audit issues later on.

4. Parking

Did you know parking is a taxable benefit? Many employers don’t! While there are exceptions, you should treat parking you offer to your employees as a taxable benefit. Doing so will help you avoid audit issues if the CRA decides to investigate your books.

Parking isn’t always a taxable benefit. For example, providing parking for a disabled employee is non-taxable. The same is true of parking situations where there are fewer spaces than employees. In most other situations, however, the CRA considers the provision of parking as a taxable benefit, whether or not you own the lot.

You should report the fair market value of this benefit, less any cost your employee bears. If you pay for your employees’ parking, talk to your payroll provider about how to report this benefit.

5. Automobile Operating Expenses

Do your employees often drive for work? If they do, you’ll need to keep accurate logs about who is driving, when, where, and how far. If you have fleet vehicles—company-provided cars, trucks, or vans—you must keep logs. 

Employees who use personal vehicles for company purposes should also keep a log. You’re not necessarily required to, but it’s a good idea for both you and the employee. Employees often report inaccurately, which leads to you having incorrect data for your books. Use an app to cut down on incorrect reporting.

If you keep an eye on these five audit issues, audit time will be much less stressful!

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Compliance

How to Avoid Payroll Fraud When Expanding into Canada

Posted by Stacey Duggan

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Sep 27, 2017 9:00:00 AM

How to Avoid Payroll Fraud When Expanding into Canada---1.jpgWhether it’s done unintentionally by a business, or intentionally by its employees, payroll fraud is a lot more common than you think. In fact, payroll fraud happens in 27 percent of all American businesses and occurs nearly twice as often in small organizations with less than 100 employees than in large ones. If your business is expanding into Canada, committing payroll fraud can be done unintentionally and it’s a lot easier to do than you think.

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

Avoiding payroll fraud is an absolute must for expanding businesses. Expansion should start on the right foot—not with a lawsuit. In order to ensure your business is in compliance with Canadian payroll laws and avoids internal payroll fraud, here are some things you need to consider.

The Types of Payroll Fraud

In most cases, there are two major ways payroll fraud can occur: at the fault of employees or at the fault of a business. Employees can embezzle money from the business they work for, while businesses can curve taxes from the government. Whether it’s intentional or not, in the eyes of the law, payroll fraud is always a crime. If you don’t take the necessary precautions, you can be prosecuted.

First and foremost, your employees can commit payroll fraud. If your payroll system isn’t closely monitored or handled by a trusted professional, it can actually be quite easy. Ghost employees are one of the most common types of payroll fraud. This involves a payroll manager or staff member creating fake employees or failing to remove terminated employees from the payroll system. Funds are then diverted to these ghost employees and a payroll staff member claims the money. Timesheet fraud is also a major concern, as more than just payroll staff can commit this type of fraud. Timesheet fraud involves employees incorrectly documenting the .

00number of hours they’ve worked, leading to a higher paycheck, for hours that aren’t actually real.

On the other end of the spectrum, employers are also capable of committing payroll fraud, and the Canadian Revenue Agency often isn’t very forgiving. Worker misclassification for example, can be committed intentionally or due to a misunderstanding of the rules: a mistakes that’s easy to make for businesses expanding into Canada.

The CRA requires businesses to classify each and every employee as full-time employees or independent contractors, depending on the type of work, benefits, and pay the employee receives. However, to avoid paying health insurance premiums, sick pay, payroll taxes, and other fees, some employers will intentionally classify workers as independent contractors, when they’re not. Whether it’s done on purpose or on accident, worker misclassification leaves your business responsible for paying up to $25,000 per instance, and in some cases, you can even face jail time.

For businesses expanding into Canada, it’s easy to overlook the important of regulated payroll, inner-business audits, and a thorough understanding of Canada’s payroll rules.

How to Avoid Payroll Fraud

Now that you know how payroll fraud can occur, it’s time to figure out how to avoid it.

For many businesses, solutions are as simple as introducing regular payroll audits, advanced punch-in systems, and payroll staff the company can trust. However, for businesses that are expanding into Canada, these tips aren’t enough. The greatest solution involves outsourcing payroll.

When you outsource payroll, not only is a trusted and professional business monitoring your payroll functions, you can also rest easy knowing all Canadian laws are being abided by. This leaves you in a safer situation to focus on other aspects of business, without neglecting the importance of payroll.

Where to Start

Reaching out to a payroll service provider is an absolute must. All your questions and concerns regarding payroll fraud and expanding into Canada can be addressed online, or through a quick phone call. Don’t leave your business at risk: learn how a payroll provider can help

What US Companies Need to Know about Paying Employees in Canada

Topics: Compliance

Top 5 Tips For Using a Canadian Contractor

Posted by Stacey Duggan

|

Sep 6, 2017 9:00:00 AM

Top 5 Tips For Using a Canadian Contractor.jpgUsing contract workers has become an increasingly popular option for many businesses. In fact, 1.8 million Canadians are currently in temporary and contract employment. With this large pool of talented workers so readily available, it’s no wonder you might be thinking of using a Canadian contractor.

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

However, there are some important things you need to consider before hiring contract workers from Canada. The laws are different and without complying with them, you can find yourself in a risky legal situation. Additionally, if you don’t understand exactly what your business’s needs are, you might find yourself hiring the wrong person.

Avoid the risks and keep reading for five tips when using a Canadian contractor.

1. Know Your Business Needs

Using a Canadian contractor can be a smart decision—but only if you understand exactly what your business needs. It would be a mistake to hire someone who you thought was a great fit, but didn’t have the skillset you ended up needing. Evaluate the position that needs to be filled and consider the skillset each candidate must require. Remember to think about the future needs of your business as well. Hiring someone that can be adaptable as your business grows and needs change is always a smart decision.

2. Understand The Laws

Canadian laws are different, especially when it comes to using a Canadian contractor. The Canada Revenue Agency (CRA) and a long list of other federal and provincial ministries are all motivated to question the status of your contract workers. Due to the savings in cost, some businesses have taken advantage of the system, wrongfully classifying employees as independent contractors to avoid providing benefits and in turn, saving money. For this reason, it’s no surprise there’s been a rise in audits and investigations regarding the classification of independent contractors. That’s why it’s important you understand the laws when using a Canadian contractor. Otherwise, you’ll face the long list of fines and penalties.

3. Consider an Employer of Record

There’s a lot to consider when using a Canadian contractor. From hiring to payments, things can get complicated, especially as you continue to run other aspects of your business. If things seem overwhelming during your search for a contractor, it may be time to consider outsourcing the work to an Employer of Record. An EOR handles all aspects of working with a Canadian contractor. From hiring, training, to payment schedules, everything is handled for you. One of the greatest qualities of an EOR is the expertise in Canadian laws and regulations. You won’t have to worry about late payments, misclassified workers, or improperly filed taxes: professionals with years of experience handle everything with care and a watchful eye.

4. Make Sure You’re Impressed

It’s important you’re impressed and satisfied with the quality of work you receive when using a Canadian contractor. If you’re not, you’re allowed to look for other candidates. Remember, a contract is only a set amount of time, meaning if you aren’t happy with the work, you have no obligation to continue. On the other hand, if you are impressed, you have every reason to talk with the contractor and see if they’re interested in extending the life of the contract. Who knows—you might find yourself wanting to hire them full time.

5. Ask For Recommendations

If you’re having a hard time finding the right Canadian contractor, it’s smart to ask for recommendations. This is a great tip for a few reasons. Firstly, it means someone else has worked with them before and has been impressed with the work. It also means the worker is familiar with the process and daily life of being a contractor, bringing experience to the table other’s may not have.

Using a Canadian contractor is a smart move for many growing businesses. Finding a temporary worker to fill the gabs allows growth to continue while respecting your budget. Remember, reaching out to an EOR is always easy if the process gets too unclear.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

Select the Right Employer of Record with These Do’s and Don’ts

Posted by Stacey Duggan

|

Aug 23, 2017 9:00:00 AM

Select the Right Employer of Record with These Do’s and Don’ts--.jpgOne of the most complicated aspects of expanding overseas is the hiring process. You have business needs to address that don’t always involve your new expansion. As a result, many businesses opt to work with an employer of record service (EOR) to help handle overseas responsibilities, such as hiring, training, taxation, etc.

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

When it comes to choosing which EOR to work with, things can get even more confusing. How do you know which one is best suited for your situation? To help you understand what you should look for, this is a list of do’s and don’ts for finding the perfect employer of record.

What is an EOR?

An employer or record is a service that helps expanding businesses outsource talent, manage health benefits/pensions, and hire full-time team members for a business that’s expanding into a new country. One of the main reasons to work with an EOR is helping businesses manage complicated foreign labour laws they may not be familiar with.

Each country has different laws regarding taxation, benefits, employee over-time hours, or benefits. Working with an EOR reduces the risks associated with expanding into new and unfamiliar territory, and complying with new laws and regulations.

DON’T Forget to Research

There are plenty of EOR services, it would be a mistake not to research exactly what each one offers and what you can expect you will need from them. Have a clear understanding of each company before reaching out to them for a quote. Customer reviews, testimonials, or case studies are a great way to see what quality of work you can expect.

DO Ask Questions

Have questions ready and be prepared to ask them. Before signing off on anything, make sure you’ve asked the questions you need in order to make the right decision.

Is there a customer service team with around-the-clock support? Can you pick and choose which services your company needs? What prices can you expect and how do they differ from the competition? With the right answers you’ll be able to make your decision with ease.

DON’T Overlook Your Business Needs

Choosing an EOR before you understand what your company needs is a mistake. You don’t want to find out down the road that your employer or record doesn’t offer certain services you need, or perhaps they offer too many. Before reaching out, have a deep understanding of exactly what help you need in order to expand your business.

DO Explore Your Options

One of the best ways to make an educated decision regarding your employer of record service is to shop around. Request a quote from multiple companies, compare the services offered, and consider the work experience. By shopping around you can ensure no rock has been left unturned, helping you find the perfect EOR.

DON’T Expand without an EOR

While you might think you can handle it, expanding internationally without an employer of record is a considerable mistake. Expanding on your own leaves a lot to chance.

Do you understand international labour codes, taxation regulations, vacation pay requirements, and health benefits? Did you know some penalties include fines or even jail time? Save yourself the time and reduce the risk—expand with an EOR.

DO Work With an EOR Familiar in Your Country of Expansion

If you’re expanding into Canada, you’ll want to work and EOR who has experience with Canadian regulations. Confirming this detail can be the difference between success and failure. Before you choose an employer of record, ensure they have a great deal of experience within the country you are expanding. Otherwise, you might find yourself starting your search all over again.

7 Signs It's Time to Outsource Payroll

Topics: Employer of Record

How Canadian Employer of Record Services Can Help Your Company

Posted by Stacey Duggan

|

Aug 2, 2017 9:00:00 AM

So, your company is growing at a rapid pace and you’re beginning to expand your business into Canada. Congratulations! That’s great news. Business growth is the goal for every company, however sometimes it happens faster than anticipated. Keeping up with new payroll regulations, expansion of HR duties, and Canadian regulations can be daunting and costly.

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

But there is a solution that can help your business continue to grow while you focus on important tasks. It’s called an employer of record. These companies help you organize your HR and payroll administration duties, working completely on your behalf. Keep reading to see how Canadian employer of record services can help your company navigate through this newly found territory.

HR Support

While you focus on growing your business, sometimes HR duties become the last thing on your mind. Between recruiting, hiring, training, and terminating employees, it’s possible the task of managing it all has become too much. You need more time to focus on your business and its goals, and less time spent worrying about administrative duties.

With Canadian employer of record services, you’ll be able to hand off these administrative tasks confidently. All HR responsibilities will be handled, leaving you to sit back and manage the other aspects of your company with ease. This improved process will help your company expand into Canada, while you continue to take control of things back home.

Rules and Regulations

Staying on top of another countries rules and regulations adds a handful of duties and education to your plate. If managed incorrectly, you can be left in an expensive situation, facing multiple lawsuits and expensive fines. For example, submitting your payroll data to the CRA (Canadian Revenue Agency) late, even by three days, can leave you responsible for late filing fees. And that’s one of the smaller legal responsibilities. It’s a mistake you don’t want to make, especially as your company tries to grow.

Avoid the hassle and stay on top of things by working with Canadian employer of record services. Keeping track of all important dates, legal regulations, and taxation policies are just some of the many benefits these professionals provide. Expanding into Canada can seem intimidating, but working with an EOR helps you streamline the process and avoid mistakes.

Speeds Up the Process

Establishing your business on new soil can be a slow process. For some companies, it can take years to get their company functioning in Canada. Without knowledge of the country and its regulations, getting things moving is inevitably slow.

Avoid the painstakingly slow process and consider Canadian employer of record services. These professionals take care of all the tasks involved with breaking ground in Canada, like employee recruitment, payroll, and staying up to date with regulations. This saves you time, allowing you to focus on the other aspects of growing your business.

Saves Your Money

If done correctly, expanding your business into Canada can be an extremely smart move. In fact, in 2014 Canadians spent $22.9 billion dollars in ecommerce sales, and the numbers are expected to rise. With audiences very similar to the US, Canadian consumers can become the perfect target audience for many American businesses.

However, setting up a business in Canada can be incredibly expensive. The cost of hiring and training employees alone costs thousands of dollars. Not to mention any fees associated with errors in payroll or CRA mishaps. It seems like there’s a lot of room for costly errors.

Canadian employer of record services help you save money as you expand your company into Canada. From keeping up with regulations, training employees, and handling all payroll functions, working with a EOR might be the smartest investment you can make.

What US Companies Need to Know about Paying Employees in Canada

Topics: Canadian Employer of Record

What You Need to Know About Vacation Policies for Canada

Posted by Stacey Duggan

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Jul 31, 2017 9:00:00 AM

What You Need to Know About Vacation Policies for Canada--.jpgWhether it’s to another country, into the Canadian wilderness, or just a relaxing staycation at home, Canadians love their vacation time. So much so, that many Canadians take this into account when negotiating their employment contracts.

In fact, Canada was the only country that chose vacation time as their preferred benefits. 20 percent of Canadians said that they would prefer an additional week of vacation time, compared to a $500 salary increase. Clearly Canadians know their priorities!

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

With vacation time comes vacation policies for Canada. Companies and employees alike need to be aware of what the rules and regulations surrounding Canadian vacation policies to properly account for accurate payroll processing. There are many myths surrounding vacation policies for Canada and it’s important to know truth from fiction. If you don’t already, here’s four things you’ll need to know about vacation policies for Canada.

They’re Different in Every Province

That’s right, if you conduct business in only one province, you’ll only have to know your province’s vacation policies. However, if you conduct business and hire employees in multiple provinces, you’ll need to be aware of the differences to ensure proper payroll accuracy and ensure compliance.

If you have trouble keeping track of provincial regulations, it may be a smart investment for your company to enlist the support of a back office solutions provider, who can not only keep you informed on provincial differences, but handle all your payroll needs to avoid any mistakes or errors. Don’t leave your payroll to chance, trust the experts.

Vacation Policies for Canada—How it Works

Unlike Canada’s neighbours south of the border, it is mandatory for Canadian employers to offer vacation time to employees after one year of employment. Employees are entitled to two weeks of vacation time, except in Saskatchewan where the minimum is three weeks, and Quebec where the minimum is 12 days (one for every month of the year).

You may have noticed on your paycheque that every payday four percent, or six percent in Saskatchewan, is deducted for vacation pay. What does this mean? While vacation time may seem like free money, it’s actually an accumulation of a percentage of your paycheque. So, each pay period, four or six percent of your pay is withheld from you in order to pay for your time off.

For temporary employees, the accumulation of their vacation pay is given to them once they complete their employment with the individual business.

Can an Employer Reject a Request for Vacation Time?    

When it comes down to it, yes, an employer does have the right to reject requests for vacation time. Vacation policies for Canada are not meant to harm businesses, and if your employer believes that the time you have requested may negatively impact their business, they have the right to reject your request.

While they have the right, most employers do not exercise this. It diminishes employee morale, and ultimately can leave employees feeling very bitter towards their employers. While employers can reject vacation time requests, many do not in order to keep their employees happy and productive.

The Use It or Lose It Rule

Many people have heard of the use it or lose it rule, but what does it mean? The use it or lose it rule only applies to extra vacation time granted to employees by their employers. For the minimum two weeks’ vacation, employers cannot implement a use it or lose it policy.

Employees must take two full weeks off within 10 months of the end of the vacation period. You should never be fearful that you’re going to lose your vacation time unless you receive over two week’s holiday.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: human resources

5 Tips for How to Manage Payroll Effectively

Posted by Stacey Duggan

|

Jul 14, 2017 9:00:00 AM

5 Tips for How to Manage Payroll Effectively.jpgManaging payroll can be confusing to say the least. If you’re not sure how to manage payroll effectively, you’re not alone. Many companies don’t know the best ways to execute their payroll processes, which can be problematic in the future. If you’re looking to maximize the efficiency of your HR department, here’s five tips on how to manage payroll effectively.

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

1. Stay Organized

Organization is absolutely essential when you’re looking to maximize your payroll efficiency. When your payroll processing documentation is arranged in an orderly fashion, it makes your task easier and less time consuming.

Your business also needs to be organized when it comes to how to manage payroll effectively to avoid missing important dates. Never miss a deadline again by setting up a payroll calendar. This will give you a visual reminder of when tasks need to be completed before important dates. You’ll be able to manage your time more effectively, and won’t be stressing out over your payroll duties last minute.

2. Get Technical with the Right Software

Technology has made payroll processing easier than ever. For those that don’t know how to manage payroll effectively, the answer you’re looking for can be found in the right software.

There are many different kinds of software that your company could use. Payroll tax deduction calculators can help you determine how much you’ll need to deduct for your staff including federal tax withholding, provincial tax withholding, employment insurance, and Canadian Pension Plan.

Other additional payroll software, like PayDayTrak, can help you:

  1. manage clients and employees;
  2. add additional expenses or changes to an employee’s pay;
  3. track time off;
  4. easily download reports;
  5. access previous employee documents, such as paystubs, cheque history, ROE’s and T4’s; and
  6. access all payroll invoices.

3. Stay on Top of Relevant Payroll Rules and Regulations

Legislation surrounding payroll is always changing. In order to avoid any potential lawsuits, you need to be up-to-date on all relevant payroll rules and regulations. There’s no excuse for a company managing their own payroll to not know how to comply with government regulations. This will also help you when tax season rolls around so that you don’t get audited.

To help companies better understand the rules and regulations surrounding payroll compliance in Canada, the Canadian Payroll Association released a variety of Payroll Best Practices Guidelines.

4. Keep it Simple Yet Effective

There’s no need to overcomplicate your payroll. Simplifying your payroll process can help keep things running smoothly, with less effort from you and your HR department.

As an example, switching from cheques to direct deposit is a great way to simplify your payroll process. Instead of having to keep track of all the cheques you’ve handed out, you can keep a simpler electronic documentation of your bank transfers which will make your payroll process easier in both the short and long term.

5. Don’t Stress, Outsource Payroll Services

We get it, managing your own payroll can be seriously stressful. The last thing you need to add on top of your already busy schedule is payroll and HR administrative tasks. That’s why many businesses choose to outsource their payroll—but you’ll need to find the right one.

Payroll service providers know not only how to manage payroll effectively, but can give you peace of mind knowing that everything is completed with the utmost diligence and knowledgeable expertise.

Outsourcing payroll services is especially beneficial if your business is located outside of Canada, but are still looking for Canadian employees. An employer of record can help you effectively navigate the Canadian judicial system free from error, saving you precious time and money.

Why wait? Get in contact with a payroll provider and employer of record today!

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

How to Handle Canadian Payroll Taxes for a US Company

Posted by Stacey Duggan

|

Jun 30, 2017 9:00:00 AM

How to Handle Canadian Payroll Taxes for a US Company--.jpgPayroll taxes are complex and require a trained eye for accurate compliance. For American companies entering new territories in Canada, Canadian payroll taxes for a US company feel even more complicated than calculating taxes at home base.

There’s plenty of key points to take away that reduce the burden of calculating Canadian payroll taxes. Here’s how US companies can handle them.

Meet Deadlines

Canadian payroll taxes have to be submitted to government agencies and regulatory bodies by a specified date. This date varies depending on the type of business and its annual revenue.  The Canada Revenue Agency (CRA) is the federal government agency that sets these deadlines. They promote Canadian tax regulations for person and business, along with filings, forms, and all other related issues. They’re in charge of guidelines regarding business and personal tax.

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

Deadlines can change, so US employers need to stay vigilant to ensure timely submission, and avoid fines, audits, and other issues that could occur with late filing. Filing remittance reports falls to the responsibility of the employer only, meaning it’s crucial that American businesses are punctual with reports.

Ensure Correct Classification

US companies need to define their Canadian employees correctly to ensure they’re paying the correct Canadian payroll taxes for US company. Independent contractors and full-time employees do not have the same withholding rates, and tax deduction mistakes could result in back tax payments to reimburse the employee.

In addition, US employers will find themselves in the CRA’s sight, and could face fines and penalties for misclassification. While some American businesses opt to label all employees as independent, this method is rarely correct, and results in further consequences–easily avoidable with correct classification. Talk to the in-house payroll department or the CRA for a clear understanding about labels to ensure taxes are properly deducted.

Know the Applicable Taxes

US companies need to know which taxes apply and which amounts are deducted according to the necessary federal and provincial laws. Canadian employees have source deductions removed from each period: Canada Pension Plan (CPP), Employment Insurance (EI), and income tax.

CPP funds the retirement income system, which all Canadians 18 and over are required to contribute to. EI is a benefit to employees who lose their job, outlining receivable amounts as based on previous salaries, hours worked, the jurisdiction’s unemployment rate, and other factors. Income tax is a mandatory federal deduction as based on the taxable income of individual Canadian citizens.

US companies need to ensure thorough understanding of these three players when calculating Canadian payroll taxes.

Understand How to Calculate Withholdings

Canadian employee wages are subject to Canadian tax withholdings. Withholdings are calculated based on employee income, and are affected by other non-salary monies, such as tips or bonuses, before deduction. Withholdings, or deductions, are done every pay period, and calculated from both the employee’s pay statement, as based on the individual income and tax class, and the employer’s business itself.

Both EI and CPP are subject to yearly and pay period maximums. It’s up to the employer to track contributions to ensure the right amount is withheld. Any excessive amounts withheld have to be refunded to the employee.

Outsource to the Pros

A great alternative to DIY is to outsource Canadian payroll taxes for US company. Partnering with an employer of record provides knowledgeable experts who know tax codes and remittance deadlines inside and out, ensuring US businesses stay on time and are compliant with Canadian payroll regulations.

Acting as the employer for Canadian workers, they’ll manage tax withholding so American businesses can relax knowing their company meets the right tax codes. This kind of partnership provides peace of mind that the job is done correctly and free of error.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Payroll Processing

5 Ways an Employer of Record Can Contribute to Business Growth

Posted by Stacey Duggan

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Jun 19, 2017 9:00:00 AM

5 Ways an Employer of Record Can Contribute to Business Growth--.jpgBusinesses are always looking for ways to expand their business, through work practices, company brand, and increasing the number of staff employed. With expansion comes a number of other burdens, particularly in the administrative field. These very quickly take up time alongside growth of the business itself.

There’s a solution that makes it easy. An employer of record (EOR) can help with business growth in five different ways. Keep reading to learn how.

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1. Long-Term Savings

An employer of record handles a wide variety of issues and matters for a cost that’s less expensive than it is to manage in-house. As EORs help many clients, businesses are essentially sharing these resources through the EOR, generating savings from software updates, HR training, and time dedicated to understand workforce compliance.

Hiring new employees, for example, is a good sign, but with it comes more paperwork and additional time to manage them. It means legal and regulatory changes, ongoing training regarding HR, adding to payroll, and other employee training regarding health and safety, workplace management.

Ensuring HR and payroll is in line with government standards is a time-consuming that takes time away from core tasks. EORs stay on top of these duties, allowing employers to use that time growing their business.

2. Added Value to Hiring and Staff Management

A growing business includes an increase to the number of staff employed. As a co-employer, an employer of record will hire and manage staff on behalf of the company. For businesses venturing into new markets, EORs understand the process in place to ensure correct hiring.

They’ll handle the interview process and training, to guarantee new hires meet the specific qualities sought by employers. Providing EORs this kind of pre-determined outline ensures the best fit and staff for a company to continue to grow with the necessary support and resources.

3. Avoid Mistakes

Mistakes have serious consequences with the Canada Revenue Agency, other government bodies, and generally cause an overall headache for businesses. An EOR makes sure a business’ payroll and deductions are error-free to avoid fines, penalties, and lawsuits.

With an EOR handling payroll, compliance, and related matters, they’ll ensure employees are classified as they should be, the business is in line with provincial and federal workplace standards, and all other necessary requirements are met. This keeps businesses on the government’s good side, and employees happy.

4. They Provide the Right Tools

Software eases business growth and expansion. It’s also expensive and requires constant updates. Working with an EOR means there’s no need to worry about forgetting to update software or searching for the right kind because they maintain the different platforms in order to do their job effectively.

EORs are experts trained in HR and payroll to make implementing easy as businesses grow. They have knowledgeable associates and offer additional perks, such as group benefits and discount insurance rates, which employers–particularly for small businesses, don’t always have access to alone. EORs provide support to deal with all kinds of situations and answers to any questions there might be.

Whether it’s a company with a small client base and limited staff, or a bigger company entering new territory, EORs cover many aspects so businesses don’t have to worry about remembering to keep up with software or ensuring access to appropriate benefits.

5. Peripherals Managed

With the time-consuming and tedious tasks covered, businesses can get back to focusing on strategy, marketing, and overall growth. It’s hard to manage core tasks when administrative tasks are taking up a significant part of the day.

Tax, payroll, labour, and employment are covered by professionals with the knowledge and time to research and understand these matters. When employees stay focused on core tasks and an employer of record handles the rest, businesses can ensure the best competencies are in place for business practice and expansion.

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

Topics: Employer of Record

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