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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.

12 Things an American Company Looking to Pay a Worker In Canada Needs to Know

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.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

How to Ensure Compliance When Expanding into Canada

Posted by Stacey Duggan


May 14, 2018 9:00:00 AM

How-to-Ensure-Compliance-When-Expanding-into-Canada-compressorYour business is expanding into Canada. Perhaps this is the reality you’re currently facing or maybe it’s a possibility on the horizon. You may even be in the middle of the expansion or you might already be operating in Canada. 

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

In any one of these situations, you’ll want to know more about ensuring compliance. Here are a few ways you can be sure you’re maintaining compliance when expanding into Canada.

Familiarize Yourself with the Legislature

The first thing to do when expanding into Canada is to take a look at the legal framework. Try to familiarize yourself with the rules. You’ll probably take some time to consider at least a few aspects of your Canadian operations. You might want to think about your business structure and tax implications of that structure, for example. 

Being familiar with the rules will help you make better decisions when you’re expanding into Canada. Familiarizing yourself with the rules now will also help you later on. It’s also useful, even if you engage the help of experts, since you’ll be able to understand what they’re doing.

Seek Legal Advice

The moment you decided you were expanding into Canada, you probably began looking for legal advice. While you and your staff members are all talented, you’re also busy. You also recognize you don’t have the expertise and you may not understand all the nuances of Canadian law. 

The number-one reason companies fail to maintain compliance is that they don’t fully understand what’s required of them. They may understand the basics, but they miss a key point or a particular corollary. 

Seeking legal advice can help ensure compliance when you expand your business into Canada. The legal expert can spot issues in your plan and guide you on revisions to make sure you stay on the right side of the law.

Partner with an Employer of Record

One of the easiest ways to maintain compliance when you’re expanding into Canada is to engage a Canadian employer of record (EOR) for your business. These experts will assist you with many aspects of your HR operations in Canada. They’ll administer payroll, assist with hiring and terminating employees, and deal with benefits as well.

Since they operate in Canada, they’re more familiar with compliance demands and regulations than you may be. They have a better understanding of the ins and outs of the law, and they’ll be able to guide you through HR compliance and other activities.

Most business owners and HR managers make mistakes not because they don’t understand or because they don’t care. It’s because they’re unaware of a certain law. Working with an EOR helps you avoid the most common kinds of compliance errors.

Monitor Compliance

You likely monitor compliance as part of your day-to-day activities in your home country. If you have other locations, you likely monitor compliance there as well. Things should be no different when you’re expanding into Canada. Be sure to monitor compliance for your Canadian operations as well.

Monitoring compliance is probably the best way to ensure compliance. An employer of record can help you here as well. They monitor their own compliance for you and their other clients as well. If a change occurs, they’ll be the first to know. They’ll also adjust their operations to ensure continued compliance.

Maintaining compliance doesn’t need to be difficult. It can be time-consuming, however, and it can become complex if you’re unfamiliar with the legal requirements in a new location. Familiarize yourself with the law and work with knowledgeable partners to ensure your compliance is up to date when you’re expanding into Canada.

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

Topics: Business Expansion

4 Challenges You’ll Face When Expanding Business into Canada

Posted by Stacey Duggan


May 2, 2018 9:00:00 AM

4-Challenges-Youll-Face-When-Expanding-Business-into-Canada-compressorExpanding a business into Canada is a big move. Whether it’s your first expansion or the latest in a series, beginning business operations in Canada has many advantages. It also comes with its fair share of challenges, many of which you’ll need to consider carefully. 

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

What kinds of challenges can you expect when expanding business into Canada? Here are a few of the most common ones American businesses face north of the border.

1. Choosing the Right Structure

The first challenge you’ll face when expanding business into Canada happens before you’ve even opened your doors. You’ll need to choose a business structure for your operations. 

This is an important consideration as your business structure has many impacts on the business itself. The most prominent of these are tax considerations. A branch office is taxed quite differently than a subsidiary, and unlimited liability corporations (ULCs) are subject to yet another tax structure. 

Your business structure has other impacts as well. Structure can impact everything from how you handle losses to who you place on your board of directors. It’s important to ensure you select the right structure for your Canadian operations.

2. Learning Employment Legislation

You’re no stranger to employment legislation. After all, you and your HR staff deal with American laws about how to hire, classify, and terminate employees, among other employee-related activities. You’re also familiar with different levels of regulation. Both the federal and state governments can impose new rules and regulations. 

In Canada, there are also two levels of government looking after employment legislation. The federal level, however, only covers federal employees or about 10 percent of the workforce. The remaining 90 percent of Canadian workers are subject to provincial employment legislation. 

Employment legislation varies from province to province, and it covers everything from how an employee is to be hired and how they’re to be terminated to how to calculate their vacation time and pay them for holidays. Learning the legislation is important so you can ensure you’re compliant with the law. 

Of course, it also takes time to learn any kind of legislation in detail. While you may understand the basics, truly understanding Canadian employment legislation will take time. If you operate in more than one province, the task will become more difficult as you’ll need to learn and apply two sets of rules at the same time.

3. Administering Payroll

Canada also has different rules and regulations about payroll, a fact most companies discover when they’re expanding business into Canada. You’re familiar with needing to deduct income tax and other amounts from an employee’s paycheque, but how much and what you’ll need to deduct vary in Canada and even from province to province.

When expanding business into Canada, you’ll need to determine how you’ll compensate your employees. Then you’ll need to determine what counts as “taxable benefits” under the Canada Revenue Agency’s rules. While you likely guessed an employee’s salary is taxable income, you’ll also need to think about compensation offered through employee discounts, stock options, benefits, and even employee reimbursement programs.

The Canada Pension Plan and Employment Insurance are also considerations for your payroll withholdings. The amounts you’ll need to withhold from an employee vary with salary, up to different maximum contributions. A payroll deduction calculator can be quite useful.

4. Needing Good Advice

When expanding business into Canada, it’s almost inevitable you’ll need to ask questions at some point or another. Many HR managers and business owners find they don’t always know where to turn when it comes to their Canadian operations.

There are many excellent resources available. The CRA has some helpful guides about payroll and payroll calculators are useful tools. Government legislation is freely available, and legal advice is close at hand. A partnership with a Canadian PEO can also make expanding business into Canada much easier.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

Not Sure How to Expand Your Workforce into Canada?

Posted by Stacey Duggan


Apr 30, 2018 9:00:00 AM

Not-Sure-How-to-Expand-Your-Workforce-into-Canada-compressorA decision to expand a business into Canada is one thing. A move to expand your workforce into Canada is quite another. While your workforce expansion may come as a logical extension of your new business operations in Canada, it may also be that you’re expanding your workforce without necessarily setting up formal business operations in Canada. 

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

How can you go about extending your workforce into Canada? There are quite a few different methods you can employ.

Apply for TN1 Visas

If you’re an American or Mexican company, you have the advantage of the North American Free Trade Agreement (NAFTA) to help you structure trade with Canada. You also have many experts already on your team. 

If you’re expanding your business operations into Canada, you may want to send some of them north of the border to oversee the expansion. You may also want to send some of the talented professionals you employ to Canada if you create a partnership with a Canadian firm or if you happen to fund a new project, such as research on new technology. 

A TN1 visa may be one good way to expand your workforce into Canada. The TN1 visa is designed to assist qualified professionals in certain fields. If you wish to send qualified experts to Canada on a short-term assignment, the TN1 visa may be the answer. You can also use the NAFTA Intra-Company Transfer program.

Hire in Canada

The most obvious way to expand your workforce in Canada is to hire Canadians to work with your company. There are at least two ways to hire people in Canada to work with you.

The first method is to hire Canadian contractors to work with your company. These people are set up as vendors, not as employees. They sell your business a product or service. There are certain tax advantages to this situation. If you need permanent, full-time staff, however, it won’t be the right solution. 

The other option you have is to hire Canadians as employees of your business. This is much simpler if you already have business operations in place in Canada, or if you’re planning to open your doors there soon. You can hire Canadians as employees of foreign firms, but the situation regarding payroll and taxation becomes somewhat more complex. 

How can you hire Canadians and expand your workforce? You can recruit them yourself, or you may wish to work with an agent on the ground in Canada. A recruiter may be a good choice.

Work with a Professional Employer Organization

What if you need to hire many people in Canada? Maybe you had one Canadian employee and no real business structure in Canada. Now, the situation has changed and you need to expand your workforce. Perhaps you’re planning a business expansion in Canada, but you’re not sure how you’re going to go about it just yet.

Working with a Canadian professional employer organization (PEO) may be the best move in both of these situations. In fact, partnering with a PEO may be the right move for anyone looking to expand their workforce in Canada for any reason.

What does a PEO do? They act as the employer of your Canadian employees. This means they handle payroll, taxation, withholdings, compliance, and much more. Since they’re familiar with Canadian legislation on all of these points, the process becomes more streamlined and simplified.

Making the move to expand your workforce into Canada can sometimes seem like a daunting task. With these tips in hand, you can make it a much simpler process. If you’re unsure of your next steps, get in touch with a Canadian PEO today. They can help you find the right solution for your expanding workforce.

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

Topics: Business Expansion

What International Companies Need to Know about Severance in Canada

Posted by Stacey Duggan


Apr 6, 2018 9:00:00 AM

What-International-Companies-Need-to-Know-about-Severance-in-Canada-compressor.jpgAs an international company operating in Canada, you’re well aware of the differences in rules. Payroll is most definitely not the same, and the business taxes you face are also quite different. There may be different regulations for the products or services you offer. 

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

This is also true when it comes to employment legislation and the rules around hiring employees, compensating them for vacation time and leaves, and so much more. Letting an employee go might be another issue. While you hoped never to face it, you now need to terminate someone’s employment with your company. 

Severance may be one thing you’re wondering about. How exactly is it handled in Canada?

When Must You Provide Severance?

The first question you’ll need to ask is when you’ll need to provide severance pay. There are quite a few scenarios. 

If you dismiss or stop employing the person, they may be entitled to severance pay. If you’ve gone bankrupt or declared insolvency, you cease to employ the person and they’ll be entitled to severance. If you give employees an ultimatum and they decide to resign as a result, they’re entitled to severance. 

If you lay off an employee for more than 35 weeks in a 52-week period, their employment is considered terminated. If you decide to close an office or discontinue business at a location, you’re considered to have laid off the employee.

A Mix of Notice and Severance

If you give an employee written notice of their termination and the employee then resigns with two weeks’ notice, you may be required to pay them severance. This situation would come up if the employee was still entitled to termination pay beyond those two weeks.

Other Reasons to Provide Severance

These aren’t the only scenarios when you may be required to or even want to provide severance to employees. If you need to lay off employees, you might offer a severance package immediately. Employees who opted to take it would be free to seek out other employment.

A restructuring activity may also put severance on the table. Some employees may not like the new terms you’re offering them and, since they’re not the terms they were hired under, they have legal grounds to refuse. You can offer these employees severance.

What Are the Rules?

Like virtually everything else in Canada, severance rules differ from province to province. If you operate in Ontario, you’ll need to look at the rules for severance in Ontario. Someone operating in BC will need to look at that province’s legislation.

To fully understand severance pay, you’ll need to look at the employment legislation for each province you operate in.

Compensation for Long Service

Generally speaking, severance pay is awarded to employees who have been with your company for some time. They may be senior employees or they may have a long-service track record. Often, they have seniority in the firm and they may even have specific skill sets and expertise. Severance is designed to compensate them for the loss of employment.

As a result, you may wish to offer severance in other circumstances than those required by law. You’re only bound to provide severance in the cases specified by the law, however.

How Do You Calculate It?

Each province lays out its own rules for calculating severance pay. In Ontario, you add together the number of years of employment plus the number of months of an incomplete year. Take the sum and multiply it by the employee’s regular weekly wages. This will give you their weekly severance pay for a maximum of 26 weeks.

Different provinces use different formulations, of course, so severance pay for an employee in BC can’t be calculated the same way.

If you’re concerned about severance pay or need to calculate what it will cost you, talk to a Canadian EOR and payroll service provider. They can walk you through the steps and help you navigate the nuances.

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

Topics: Business Expansion

Try Our 2018 Canadian Payroll Calculator

Posted by Stacey Duggan


Mar 9, 2018 9:00:00 AM

Try-Our-2018-Canadian-Payroll-Calculator---compressor.jpgTax season has arrived! As you busily prepare your return for the 2017 year, your thoughts may have already turned to how you can better prepare for this year. If your bookkeepers are flustered and overworked as they scramble to get your 2017 tax return in order, they’ve no doubt wondered if there’s an easier way to do things. 

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

As the old saying goes, an ounce of prevention is worth a pound of cure. Instead of trying to fix everything at the end of the year, you’re thinking about how you can get it right out of the gate instead. Wouldn’t it be wonderful if you could be sure you were calculating and collecting the proper payroll taxes and calculating vacation pay properly? 

You can! Give the updated 2018 Canadian payroll calculator a shot.

Updated CRA Rules

As with almost any government revenue department, the Canada Revenue Agency (CRA) updates its rules and processes on an almost yearly basis. This reflects changes in legislation, which then affect how businesses are to administer payroll and what withholdings they need to collect. 

Sometimes, legislation changes are the result of new government bills being passed into law. In other cases, the changes result from provisions in laws already on the books, which see increases (or decreases) over time. 

New tax credits come and go, and income tax rates change. You should always check in with the CRA or your Canadian PEO to find out about the latest changes and updated rules to make sure you’re up to date.

Changes in the Business

The other issues complicating payroll are the changes within your own business. Employees get raises or are promoted and end up in new tax brackets. Someone accrues more vacation days or more sick days because of the length of their tenure with your business. You may decide to offer a benefit or restrict your existing plan. All of these changes can affect your payroll and the withholdings you need to collect. 

You might also change your operations. Maybe you’re hiring temporary or seasonal employees for the first time. Maybe you’ve just expanded your operations from Ontario into British Columbia as well. You have lots to learn.

Why Use a Canadian Payroll Calculator?

With so many different things to keep track of, from CRA rules to expansions in your business itself, you might wish there was a tool to help you.

The good news is there are tools available. Payroll calculators were created to help business owners and accounting professionals keep things straight when it comes to figuring out payroll and withholdings. A Canadian payroll calculator in particular helps you keep track of payroll deductions for each of the 10 provinces and three territories.

Calculators come with pre-set functions. You input the information, such as the employee’s hours, their rate of pay, and where they work, and the calculator will do the rest. The best calculators ask for more information, but even the most basic can give you a quick check to ensure you’re on the right track with payroll.

The 2018 Update

As useful as calculators are, they’re not much help if they’re outdated. It’s why you need to give the new 2018 Canadian payroll calculator a whirl. If you’ve been using the 2017 calculator, you may be surprised to find just how much has changed between last year and this year.

What changes are there? You can take a look at the CRA’s website for a comprehensive listing of all the changes to the tax regime in Canada. The updated 2018 calculator reflects all of these changes, which will help you estimate payroll more accurately. Better estimates mean fewer errors to correct and less scrambling later on.

Try the new 2018 Canadian payroll calculator for yourself! Your accounting and HR staff will thank you.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

4 Signs Your Company Needs Employer of Record Services

Posted by Stacey Duggan


Feb 19, 2018 9:00:00 AM

4_Signs_Your_Company_Needs_Employer_of_Record_Services.jpgEmployer of record services have been growing in popularity in recent years. As the size of the contingent workforce has grown, and more businesses and industries have adopted contingent working arrangements, the need for these services has also grown.

The contingent workforce is predicted to keep growing into the future, which means EOR services aren’t going anywhere any time soon. In fact, you might be looking at adopting them for your business in the near future. You may even need these services right now!

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

How can you tell if you need to adopt employer of record services in your business? These four signs may provide some clues.

1. You’re Hiring Many New Contractors

Until recently, most companies used part-time and full-time permanent working arrangements. You’d hire an employee and they’d stay with you until you let them go or they quit. If you didn’t need another person working 40 hours a week, you may have hired someone part-time versus full-time, but that was about as much flexibility as you had.

Now, you have a choice of many different options, all designed to give you much more flexibility. Seasonal, temporary, and contract workers have all become much more popular. Today’s business environment demands organizations be nimble, and a contingent workforce helps you navigate this environment more easily.

If you’ve recently started hiring contractors or you’ve hired quite a few of them, you may find you don’t have the resources to manage them properly. In this case, employer of record services could be just what you need.

2. You Don’t Know the Legislation

Are you expanding your operations into Canada?

This situation can quickly become confusing. How well do you know the legislation in Canada? You may be surprised by the number of differences between Quebec and Ontario! Foreign firms have a large challenge ahead of them. The Canadian payroll and taxation system is quite different from that of the US or the UK. Add in the fact that legislation changes between provinces and territories, and you have a recipe for trouble.

Employer of record services help you avoid any trouble with the Canada Revenue Agency. Since the service provider handles everything to do with payroll, you don’t need to worry the CRA is going to come knocking on your door about a tax error you didn’t even know was an error.

3. Your HR Department Is Overwhelmed

Whether it’s because you’ve suddenly expanded your contingent workforce or because you’re operating in many new jurisdictions, you just don’t have the HR personnel to keep up with payroll and taxes any longer. Your people are constantly run off their feet.

What should you do? Hiring is one option, but you’re not sure your budget can take it. Take some of the load off by getting employer of record services. These services are often a more economical solution than hiring more staffers for the HR department. It allows your team to focus on their core tasks, rather than trying to learn Canadian tax legislation and Saskatchewan vacation time rules inside out.

4. You’re Concerned about Compliance

Maybe you’re operating in a new jurisdiction. Maybe you’ve had a tax audit in the past.

Whatever the reason, you want to make sure you’re compliant. Employer of record services make it easy!

If you see these signs in your business, consider employer of record services as a solution. Talk to a provider today and discover how they can help you run your business more effectively and efficiently by taking over the legal management of your employees.

What US Companies Need to Know about Paying Employees in Canada

Topics: Employer of Record

9 Payroll Solutions to Save Your Business Time and Money

Posted by Stacey Duggan


Jan 22, 2018 9:00:00 AM

11_Payroll_Solutions_to_Save_Your_Business_Time_and_Money.jpgEvery company is unique and has its own strengths, weaknesses, values, and goals. But almost every company can agree on a common source of frustration: payroll. There are many ways to reduce payroll mistakes, but if you’re serious about saving your business time and money, it’s probably time to implement some of the following payroll solutions.

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

1. Switch to Salaries

This payroll solution may seem like a big change, but it could save you lots of money. When you begin paying your employees by salary rather than hourly wages, it simplifies the payroll process and ends up saving you time every payday. Staff hours won’t fluctuate anymore and you won’t need to keep track of hours worked or fiddle with inputting different values every week.

2. Outsource

If you want to save yourself time and you find that the payroll process has become quite arduous, try outsourcing. You save labour hours by taking the task off of your hands and handing it over to professionals who may be able to complete the process faster.

Not to mention, you may be putting your company at risk by handling payroll on your own.

3. Go Green

Still issuing paper pay stubs? It may be time to switch it up. Make online pay stubs mandatory and you could save your company money on paper and postage. You could take it a step further and save money on tasks other than payroll; like these companies, who not only saved money but also made money by going green.  

4. Open a Second Bank Account

Tax professionals suggest that you operate a separate bank account that is used for payroll only. This separates money that is appropriated for payroll and payroll taxes from general business funds. It helps you stay organized and reduces your chances of making a mistake.

5. Make Direct Deposit Mandatory

The more uniform your payroll practices are, the easier they will be. Direct deposit is more convenient for your staff and it saves you money spent on drawing up paper paycheques.

6. Offer Unlimited Holiday Time

By giving your staff unlimited PTO, you reduce the number of pay-codes you have to deal with. Not to mention, it can dramatically increase morale.

7. Use the Cloud

More and more companies are planning to move payroll to the cloud. Doing so can reduce labour time by eliminating manual work. Even better, you can integrate this with other HR software.

8. Start an Internship Program

There’s never a shortage of students looking for professional experience. Consider partnering with a local college or business school and starting an internship program. This way, you can become better involved in the community while receiving additional help.

9. Allow for Attrition

Attrition can save you money gradually, over a long period of time, and you don’t even have to do much. Simply eliminate as many unnecessary staff functions as possible in order to consolidate positions. This payroll solution can save you big bucks and even increases efficiency.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing

7 Audit Issues Canadian Payroll Companies Must Avoid

Posted by Stacey Duggan


Jan 12, 2018 9:00:00 AM

7-Audit-Issues-Canadian-Payroll-Companies-Must-Avoid---compressor.jpgAt some point or another, you might have to deal with the CRA if you’ve been audited. However, audits are easier to get through when the business is compliant with CRA guidelines. 

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

Steer clear of these seven audit issues.

1. Personal Expense Reimbursement

Ensuring business and personal expenses are kept separate maintains a clear distinction. Wider-ranging CRA audit guidelines allow auditors to cast a wide net, and they might look into these reimbursements. You don’t want them to appear as hidden remuneration, and offering these kinds of perks may be found taxable, pensionable, and insurable by the CRA.

2. Employee Reclassification

Canadian payroll companies have to classify employees correctly to ensure the right tax amounts are deducted. Don’t use loopholes to attempt to get around employee classification, like terminating an employee and re-hiring them as a contractor. 

What’s the difference between employees and independent contractors? If you’re unsure whether you’ve defined your employees correctly, the CRA website lists helpful tips.

3. Vehicle Allowances

The standard definition of vehicle allowance is a flat rate allowance to drive for work-related purposes. The benefit of personal use of a company vehicle must be included on staff members’ T4 slips as income. Taxable benefits for vehicles indicate they’re pensionable and insurable, which requires reporting CPP, EI, and income tax.

The CRA recognizes two taxable benefits related to company vehicles: a standby charge similar to car wear and tear, and operating a cost benefit related to the number of kilometres a vehicle is driven. Whether it’s a fleet vehicle or personal, best practice for Canadian payroll companies is to keep a logbook for both types to avoid any auditing issues.

4. The Independent Contractor

Independent contractors are not employees, which means they’re paid differently than your salary staff. Employees must be classified correctly to ensure adequate payroll and tax deductions.

Consider making it a mandatory policy to use the T4A slip for subcontractors or independent consultants.

5. Timely Remittances

Not remitting government deductions on time is a CRA red flag. Money that’s collected from payroll sources and GST has to be submitted on time. Knowing how payroll taxes are calculated is important, in addition to knowing remittance deadlines. Failing to submit them on time results in stiff penalties by the CRA.

The government considers these amounts as their own “funds in trust” held by a business on a government’s behalf. Canadian payroll companies should ensure they submit their payments on time and in the correct amounts. Staying diligent about this duty keeps you clear of any auditing mishaps.

6. Salary Expenses

Bonuses, cash payments, and extra compensation for employees should go through payroll to ensure they’re included on the T4 slip. The CRA looks out for this to ensure you’re keeping an updated record of any staff gifts and to guarantee these gifts are properly reported.

7. “Associated” Companies

Canadian payroll companies with other businesses or “associated” companies are more likely to attract additional attention. Businesses with multiple companies can enjoy lower tax rates on taxable active business income due to small business deductions. But this section can get complex fast.

Ensure clear ownership lines and defined majority shares. Increasing the number of shareholders within multiple groups owned by the same people can get sticky. If you are debating moving people around within your organizations, consider using an accountant to assist and keep an accurate record of changes.

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

Topics: Payroll Processing

How Canada Payroll Service Providers Can Grow Your Business

Posted by Stacey Duggan


Dec 27, 2017 9:00:00 AM

How-Canada-Payroll-Service-Providers-Can-Grow-Your-Business---compressor.jpgGrowing a business takes a lot of time, energy, and money. Every business owner is seeking to expand sales and make their business better than the year before. Growth is imperative for a business. 

Canada payroll service providers can help you grow your business. With their help, you’ll be that much closer to success.

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

Saving You Time

As the saying goes, time is money. For a business owner, this is even truer. 

Processing payroll on your own can be time consuming—you could be wasting time that could otherwise be better spent on other core business tasks. That time could be used to put plans into place or to role out changes to help your business grow, but you can’t do any of that because you’re working on payroll. 

When you hire Canada payroll service providers, you’re able to hand off the payroll management to them. In return, you can get back your valuable time, so you can focus on growing your business. Lose some of your stress and hire a payroll services provider.

Better Technology

Hiring Canada payroll service providers means you automatically update your technology. A payroll service provider always invests in top-of-the-line software. When you hire such a company, you can take advantage of this benefit.

Having access to better technology can help your business grow because everything is now processed faster and more efficiently. Employees have fewer problems with their payroll because everything is on time and on schedule. Using current technology can show investors, employees, and others that your business is organized and running smoothly.

People are more likely to be interested in a company that has its internal processes sorted out. A business is only as a good as its inner workings.

Eliminating Administrative Hold-Ups

Administrative work can hinder your business growth. If you’re not good with the details and the paperwork, your whole business can fall apart.

When looking to grow your business, it can be hard to make any real progress if your internal systems and processes are a mess. You lose time sorting them out or trying to organize them. But you’re also stuck because it’s hard to grow a business when you’re not sure who is getting paid what, who’s working when, who needs benefits, who’s left the company, etc. Your internal systems and processes should function like a well-oiled machine; when they don’t, it hinders your business growth because nothing can get done.

Hiring Canada payroll service providers to help clean up some of your backend processes gives you a better understanding of the state of your business. With that knowledge, you’re in a better position to make decisions about your company.

Canada payroll services providers can grow your business by helping you save time, aiding you with administrative hold-ups and hang-ups, and giving you access to newer and better technology.

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

Topics: Payroll Processing

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