You’re constantly looking for new ways to grow and expand your business. Perhaps you’ve considered reaching out to a new demographic, or maybe you’ve added a new product or service to your line up. Maybe you’ve considered expanding to a second location in the same town, the same state, or the same country.
Now you’re thinking even bigger. You’re going to expand your business internationally. Whether this is your first international expansion or your fifteenth, you know the process will be challenging. You’ll need to conduct careful research and learn many new rules and laws. You’ll need to work with a variety of different partners, including new vendors, new suppliers, and potentially an employer of record.
What Is an EOR?
An employer of record is a business that supplies human resources services for another business. The name comes from the fact that the EOR acts as the employer of any employees the client business has.
The employer of record provides most of the services an employer would, and they are legally recorded as the employees’ employer. They provide payroll, administer leaves and vacation pay, remit payroll taxes to the CRA, calculate and administer benefits, and even engage in hiring and termination on behalf of the international client company.
Why Use These Services?
One question you may have is why you would need to engage an EOR or use their services. After all, if you expand internationally, you’re going to set up shop in the destination country. You have your own HR department, and you can go about hiring and terminating employees as needed. After all, you do it just fine at home.
The issue here is the difference in the legal framework. An American firm is quite used to the payroll taxes and legislation set out by the US federal government and the IRS. In Canada, the rules are different, and the Canada Revenue Agency enforces them.
The provincial governments also legislate on employment. Ontario, for example, just revised the law regarding leaves and vacations, as well as holiday pay for statutory holidays. The province of British Columbia changed how its healthcare provisions work, meaning employers who have opted in to the provincial system of insurance now pay and administer different fees. The rules are different again in Quebec, Alberta, and Nova Scotia.
It Ensures Compliance
International companies moving into Canada for the first time often aren’t as familiar with the law as they think they are. Even if you’ve operated in Canada before, legislative changes could mean what you once knew is no longer true.
Working with a partner who delivers employer of record services helps you ensure your business operations are compliant with the legislation, no matter how new or recently changed. It also means you don’t need to worry about the subtle differences between laws in BC and Alberta. The employer of record will be attuned to those differences.
This can save you both time and money. Your HR staff’s workload will be reduced significantly, as they won’t be required to learn Canadian law inside out in order to administer payroll or ensure the questions they’re asking in an interview are legal, for example. It can also reduce errors in your payroll as well as tax remittances to the CRA, which can save you from costly penalties and audits.
Selecting an Employer of Record
It should be clear just why these services are so important for businesses hoping to undergo an international expansion. In the simplest terms, it makes it easier for you to expand.
One of the biggest challenges for business owners is selecting an employer of record. Be sure to conduct some careful research and talk to several providers. Always consider what’s best for your business and how each provider will meet your needs. The right provider is out there.