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Are PEOs (Professional Employer Organizations) Legal in Canada?

Posted by Ray Gonder

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Jul 30, 2013 9:00:00 AM

PEO Legal in CanadaFrom a purely business-sense point of view, it might seem optimal for your U.S.-based business to expand into Canada. The timing may be perfect, and the market may seem primed, but many companies get cold feet once they get a glimpse of the legal and logistical red tape they'd face by doing so.

U.S. companies operating businesses north of the border are familiar with the term PEO, which means "Professional Employer Organization," but they also know them by another term.

In Canada, the term EOR (Employer of Record) is used. An EOR can pave the way for your company to conduct business in Canada without the following hurdles;

  • Establishing Canadian insurance, banking, and financial infrastructure that is compatible with both your current infrastructure and the laws of Canada.
  • Establishing a Canadian administrative presence.
  • Registering and maintaining appropriate business accounts with all necessary Canadian government authorities and organizations.
  • Making regular filings and remittances to the CRA (Canada Revenue Agency) and other applicable government agencies.
  • Ensuring ongoing compliance with all Canadian Federal and Provincial regulations, including employment standards and health and safety policies.

Part of the problem with trying to jump all of these hurdles yourself is that some of these tasks are very difficult to manage from within the United States, even if you retain advisors in Canada. Your perceptions of the business world may not quite fit with the business environment in Canada. For example, most U.S. companies assume that their greatest risk lies in third-party litigation, but this isn't the case in Canada. In Canada, non-compliance with the Canadian government’s rules and regulations is a larger threat than lawsuits. This is just one example of how a Canadian-based EOR can save you from costly insurance, administrative, and payroll mistakes.

The best solution to this problem is to outsource payroll processing and HR management to a Canadian firm that has experience serving as an EOR. When you structure your Canadian operations in this way, your Canadian workers are seen as employees of the outsourced payroll processing firm. Therefore, your Canadian paper trails are thoroughly documented and absolutely compliant with Canadian laws and regulations.

You can then focus your resources and energy on the expansion and operation of your business instead of investing precious time on bureaucratic forms, conference calls with government officials, and reading up on books full of regulations. You will be able to operate confidently, knowing that your Canadian operations are up-to-date, compliant, and backed by the knowledgeable help of those with years of experience.

For more information about how The Payroll Edge can serve as your EOR in Canada, contact us. We're happy to answer your questions.

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

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll Deductions, Canadian Payroll Service, Outsourced HR Management, PEO, Professional Employer Organizations, EOR, Employer of Record, U.S. Companies operating in Canada

Ray Gonder

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