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Answering the Question: Can a US Employer Hire Canadian Employees?

Posted by Corinne Camara

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Jun 23, 2017 9:00:00 AM

Answering the Question Can a US Employer Hire Canadian Employees--.jpgPicture this, you’ve just been offered an amazing business venture in Canada. The offer is a great opportunity to generate revenue for your business and establish meaningful relationships with Canadian clients. One problem, your company is located in the United States and you don’t currently have an employment presence in Canada. What do you do? Can you even do this—can a US employer hire Canadian employees?

Many businesses face this challenge regularly, but the answer is actually more simple than you might think. The question, can a US employer hire Canadian employees can be answered with a simple yes… with some restrictions. To make sure you’re conducting business correctly in Canada, you’ll need to approach the employment and payroll process in the proper manner.

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

Know the CRA Regulations

The Canadian Revenue Agency is the Canadian equivalent of the IRS. This bureau oversees all taxes relating to payroll and withholdings. Perhaps their most relevant regulation applicable to your situation is employee misclassification.

Many businesses try to get around paying for Employment Insurance and other deductibles by classifying employees as independent contractors. There’s a great difference between employees and independent contractors under federal law, and if you’re caught by the CRA misclassifying your Canadian employees, this can have serious repercussions.

As an American business, you will still be liable for serious fines and potentially a criminal sentence from the CRA. It won’t just be you getting into trouble, but also your Canadian employee. They will have to pay out of pocket expenses and penalties, which will seriously harm the relationship between the two of you.

Employee misclassification is too risky. There are many other ways to employ Canadians without breaking the law. 

Independent Contractors

While classifying employees as independent contractors can be dangerous, actual independent contractors can be great for your business. You won’t have to worry about paying any Canadian employment taxes, and the job will still get done by the contractor or contractors of your choosing.

While the idea of an independent contractor sounds great, many employers don’t go this route because they like to exercise their control. With an independent contractor, you have to be willing to step back from the project and let them do their work on their own schedule with their own materials. Your control will have to be limited or you risk venturing into employee territory.

If you’re able to step back from the project and let your independent contractor take the reins, they are a great option for international companies looking to get work in Canada. If you don’t think this is feasible for your company, hiring a Canadian Employer of Record is the next best thing.

Employers of Record        

Most American companies that get work in Canada don’t actually want to set up a physical presence in the country. That means if they’re not hiring people as independent contractors, they’re better off hiring someone in Canada to do their taxes and payroll for them.

This is where a Canadian employer of record can come in very useful. When you hire an employer of record, you hire a temporary legal employer to conduct your human resources and payroll services. An employer of record will help your company abide by all Canadian legalities and teach you everything you need to know about Canadian payroll regulations.

How can a US employer hire Canadian employees through an employer of record? It’s simple really. First you’ll need to find a reliable employer of record to help provide you with payroll and back office solutions. Once you’ve found the right fit, your employer of record takes over from there. They manage all payroll, support, clearances, screenings and compliance services. It’s that easy.

Get started today and see how an employer of record can change your over-the-border business ventures for the best.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

Small Business Lending is Rising in Canada

Posted by Shannon Dowdall

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Jun 12, 2017 9:00:00 AM

Small Business Lending is Rising in Canada--.jpgFollowing the U.S. election, there is a large amount of uncertainty regarding the Canadian economic climate. Due to the strong ties between the U.S. and Canada, it's certain that there will be some changes regarding trade under the Trump administration.

While many Canadian economists and public policy experts have expressed concern for the next four years, data shows that following the election, small business lending in Canada actually rose.

During the month of October, the PayNet Canadian Small Business Lending Index rose from 116.5 to 119.9, and lending for mid-sized companies rose from 211.3 to 218.3.

Expectations of Growth

Following the crash in oil price, small business lending in Canada dropped significantly. This affected the majority of 2015 and 2016, which is what made November's lending hike all the more surprising.

PayNet President Bill Phelan is also optimistic regarding the potential for small businesses, especially since they have been shown so much opportunity recently.

“Once you can stabilize the economy, you can position it for growth,” said Phelan.

CNW cites that 81% of Canadians were optimistic regarding the future of small business following the election and heading into the new year.

“Hiring, inventory, marketing, and equipment are inputs that can come up quickly,” said Gary Fearnall, the Canada Manager for OnDeck, a small business lender. “It's important to be ready to respond to new opportunities when they arise.”

That said, small and mid-sized businesses in Canada should anticipate growth this coming year and poise themselves for such.

Who Can Capitalize?

Even U.S. companies may be looking to capitalize on the rise in small businesses in Canada by hiring Canadian workers and potentially opening a Canadian branch to expand.

In order to do so, however, these businesses need to consider hiring a payroll outsourcing provider in order to comply will all of the rules and regulations regarding Canadian employment. While the U.S. and Canada share a border, they do not share labour laws, and foreign employment compliance is hugely important.

Outsource Payroll

Outsourcing payroll for small companies is especially wise considering all of the hoops that need to be jumped though to ensure proper paperwork filing. The risk of filing this paperwork incorrectly can be hugely expensive and can set any business owner back quite a bit even with just one mistake.

Payroll for small companies is what the Payroll Edge does best, so if you're looking to expand your small company knowing that there are opportunities in Canada, contact us today. 

7 Signs It's Time to Outsource Payroll

Topics: Business Expansion

How Exactly Can Payroll Companies in Canada Help Your Business?

Posted by Ray Gonder

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May 26, 2017 9:00:00 AM

How-Exactly-Can-Payroll-Companies-in-Canada-Help-Your-Business.jpgAre you thinking of expanding your workforce into Canada? Many American companies decide to cross the border and hire Canadian employees, so you’re certainly not alone. Canada is similar to America in many ways, like language and culture, which makes it an obvious choice for an international expansion.

However, Canada is still a different country, and it has its own set of rules and regulations regarding employment. For this reason, paying employees in Canada can pose logistical problems for your business.

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

Fortunately, there are payroll companies in Canada that can help your expansion go smoothly. Here are some ways payroll companies can help your US-based business.

Manage Deductions for Your Employees

Canada, like the United States, requires employers to withhold various deductions from their employees’ paycheques. However, the specifics of the deductions are very different. When you hire Canadian employees, you need to learn about a whole new set of deductions, and these new deductions can be overwhelming.

For your American employees, you know you need to deduct social security tax, Medicare tax, federal income tax, and various local tax withholdings, like city taxes or county taxes. In Canada, these deductions don’t apply. In Canada, you need to deduct Canada Pension Plan (CPP) contributions, income tax, and employment insurance premiums. If some of your new employees are in the Canadian province of Quebec, there are additional deductions, like the Quebec Parental Insurance Plan.

When you work with a payroll company in Canada, you don’t need to worry about figuring out Canadian deductions. The payroll company calculates and deducts all applicable deductions for you.

Send Remittances to the Government

You’re used to sending remittances to the IRS, and a similar system is in place in Canada. Employers need to send the income tax, CPP, and employment insurance premiums they collected to the Canada Revenue Agency (CRA) on a regular schedule.

Before you can send remittances to the CRA, you need to register for a CRA account. You need to keep track of your remittance schedule—which can be range from four times a month to once a year, depending on your company—and send in payments on time. When you’re already worried about tracking remittances for the IRS, the thought of dealing with another tax agency can be stressful.

Payroll companies in Canada take control of your remittances. You don’t need to stress about setting up accounts with the CRA or remembering when your payments are due. Instead, you can spend your time focusing on your company’s expansion strategy.

Ensure Compliance with Regulations

You probably have a good grasp of the many regulations that apply to your US-based workforce, but a lot of the rules are different up north. When you hire Canadian employees, your company needs to comply with the laws in Canada, as well as the laws in your employees’ provinces. This is no easy feat since there are more than 190 provincial and federal regulations that apply to payroll.

If you don’t follow one of these regulations—even if it was an innocent mistake due to ignorance of the law—your company could be subjected to large fines. Noncompliance can even lead to criminal charges, so it’s essential that you follow every applicable regulation. When even a careless mistake or a small oversight can get your company into trouble with the Canadian authorities, hiring Canadian employees can be overwhelming.

For payroll companies in Canada, complying with Canadian regulations is nothing new. They know the laws like they know the backs of their own hands, and they can ensure your company’s payroll doesn’t get you into trouble.

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

Topics: Business Expansion

How Can a US Employer Hire Canadian Employees?

Posted by Ray Gonder

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Apr 3, 2017 9:00:00 AM

How-Can-a-US-Employer-Hire-Canadian-Employees.jpgCan a U.S. employer hire Canadian employees? Whether establishing a physical presence or remote, this should be a primary concern for American businesses considering expansion up north. Read below to learn how U.S. employers can hire Canadian workers.

Why Hire Canadian Employees?

Hiring Canadian employees may not have crossed many employer’s minds before, but it’s certainly a realistic option for a number of reasons.

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

By employing Canadians,U.S. employers can take advantage of the market up north, expanding their geographic area, customer base, and services offered. 

Canada may offer a surplus of workers for a specific industry who are simply unavailable at the current time to U.S. employers. Hiring Canadian employees exposes U.S. businesses to a highly-skilled workforce with experience in a variety of fields. 

Before hiring Canadian workers, you’ll need to research how you can. One of the easiest ways to manage Canadian employees is by contracting them through an outsourced provider, instead of hiring directly. These agencies have the best understanding for compensating these employees,handling benefits, and complying with work regulations. If you’re thinking about hiring directly, consult your in-house legal staff, or a local law firm, to determine the correct documents needed for Canadian employment, tax filing, and wage compensation.

Research the Labour and Employment Laws

Can a U.S. employer hire Canadian employees and follow the same employment laws in the States? Not at all. Canadian employment and labour standards are much different from those south of the border. To ensure a U.S. business meets the current guidelines, Canadian employment regulations will need to be reviewed–at both the federal and provincial level. Researching beforehand will ensure a U.S. business is aware of the necessary laws. 

As each province has its own employment standards, each act will need to be individually reviewed for the specific location of the Canadian employee. Wage rates vary across thecountry, meaning the minimum rate must meet the particular province’s employment standards. Different provinces set different pay periods for when employers must distribute wages–whether it’s biweekly, weekly, or simply as the employer sees fit. Also be aware of human resources: health and safety, hiring and firing practices, and employee benefits, to make sure your Canadian employees receive everything they’re entitled to. 

Other matters U.S. employers need to review include the difference in holiday schedule– Thanksgiving, Family Day, Canada Day, and the Fourth of July, (to name a few,) differ in these countries. American employers will need to be aware of unions and understand their authority regarding Canadian employees and benefits. Employment contracts vary in terms and standards. For example, non-compete clauses in Canadaare worded differently from those in the States. Canadian courts place more emphasis on balancing workers’ rights with employers’ rights torun a business.

Consider Partnering

Can a U.S. employer hire Canadian employees and seek additional help in Canada? You bet. If you’re still unsure about hiring Canadian employees as a U.S. employer, considering partnering with a Canadian organization to ensure your U.S. business meets all the requirements.

A professional employer organization, or employer of record (EOR) in Canada, is an incredibly useful team who covers the time-consuming and complex matters of employment in Canada. Acting as the legal employer for Canadian employees, they’ll handle payroll calculation and distribution, benefits, legality, and any other issues that could arise. EORs are already familiar with the system, making them a reliable and knowledgeable resource to ensure compliance and that matters are properly covered.

Providing assistance in many departments, EORs assist with global management services to handle Canadian payroll duties and regulations, and cover the brunt of legal responsibility. Partnering with an EOR will ensure your businessis compliant and operates error-free in Canada.

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

Topics: Business Expansion

How to Prepare Your US Business for Expansion into Canada

Posted by Shannon Dowdall

|

Mar 1, 2017 9:00:00 AM

How-to-Prepare-Your-US-Business-for-Expansion-into-Canada.jpgExpanding your US business into a new territory is both a daunting and exciting opportunity. Once you’ve made the decision to expand into Canada though, you can’t just head north and automatically set up shop. 

Before you get swept up in your company’s new adventure, it’s important to make sure you’ve met all the requirements for your business to operate in Canada. Take into account these steps when preparing to expand your organization.  

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

Research

Now that you’ve decided to grow your US business, your first step is to research. Registration and other basic administration tasks are some of the first things you’ll need to complete properly to make sure you’re set up as a legitimate business in Canada. You’ll have to register a business number, set up tax files and accounts, register with Canada’s Revenue Agency (CRA), and make sure your banking and insurance infrastructure is defined. 

You’ll also need to see where the best location is to expand your business. Look at all of Canada’s provinces and territories to find the best spot to break into the market. 

You may find it useful to organize these stages in a timetable to have a clear view of how long it will be before your company is fully operational. Plan ahead by setting accurate timelines for registration and similar tasks. This will ensure you meet all the deadlines required for your business to open on time. Complying with all appropriate tax codes, employment, and health and safety laws at the start will help you avoid unnecessary delays.

Understand the Legal Requirements

Legal compliance is a complex field for anybody. While you’ve complied with business and employee laws in your hometown, the laws north of you will not be identical. You need to ensure your business meets the regulations in the new territory, particularly for the province you want to operate in.

When you start thinking of expansion, understand the different laws that may apply and their differences throughout the provinces to make sure you do not violate any regulations. 

Be aware of how employment and labour laws differ, and the details required for paying and managing your staff. Is minimum wage the same in Ontario and Manitoba? Do you hire salaried staff or independent contractors? How you pay your employees in Canada will be different than how you pay your employees in the US. Employee misclassification is a serious mistake that could cost your company unnecessary fines and penalties. Classifying your employees correctly will ensure your company is compliant and your expansion goes smoothly.

Meet with a PEO

Consulting a professional employer organization is a helpful start when setting up your business in Canada. For one thing, these organizations are already compliant because they’re established in the territory you’re moving into. They can help with the nitty-gritty administrative tasks–obtaining a business number and setting up insurance, and they will act on your behalf to obtain and ensure you have all the right paperwork and have met all the applicable requirements.

PEOs also help streamline the expansion process because they’ve already completed the initial accounts and infrastructure registrations that your business will need to complete. As this is their specialization, they are great assistants when setting up business in a new territory. Including payroll, PEOs also look after compliance and human resources, combining multiple departments into one to save you time, money, and resources. PEOs have the expertise and knowledge to answer any questions you may have.

Business expansion is an extensive process with many checkpoints to begin operating in a new territory. Keeping these steps in mind when expanding your US business will make the process easier.

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

Topics: Business Expansion

4 Things Contributing to Canada's Small Business Boom

Posted by Corinne Camara

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Feb 17, 2017 9:00:00 AM

4-Things-Contributing-to-Canada's-Small-Business-Boom.jpgSmall businesses are the backbone of the Canadian economy. With 40% of working Canadians working in companies with less than 100 employees, and many others who are self employed, we believe that small businesses are holding the Canadian economy afloat. Just as importantly, this trend has translated into more rapid payroll growth.

The annual Scotiabank Global Economics Special Report on Small Business confirms that payroll in Canada between 2010 and 2015 increased by 1.4% for small businesses, compared to only 0.9% for businesses with more than 500 employees.

But what is leading this rise in small business payroll solutions and overall economic growth?

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

1. The Service Industry

Because the Canadian dollar has been weaker in recent years, this keeps many Canadians vacationing at home and visiting local bars, restaurants, and other accommodation services.

Tourism is booming here as well. Again, since the Canadian dollar is weaker than the U.S. dollar, we see a lot of tourists, especially Americans, crossing our borders eager to spend. This is driving growth in food and accommodation service payrolls at a rate of 2.4%.

2. The Decline of Industrial Powerhouses

Large infrastructure powerhouse industries like mining, oil, and manufacturing are not the backbone of the economy like they once were. With the rise of buy-local movements and alternative energy sources, consumers are now turning to the little guys for more reliable service.

3. The Rise of Small, Specialized Services

In addition to restaurants, bars, salons, and the like, the small business service industry has been increasingly dominated by small-scale employers that offer services with a more personalized approach. More technical industries, like accounting, IT, PR, and consulting, are turning to smaller business practices, too.

4. Healthcare

The healthcare industry is growing rapidly to accommodate an aging population. One third of Canada's healthcare providers, including home care professionals, chiropractors, dentists, optometrists, and primary physicians, are in the small business sector, working out of smaller offices, not hospital settings.

But What About the Future?

In a downtrodden global economy, the weak Canadian dollar will likely still be an attraction to many international businesses looking to expand onto Canadian soil. But with a strong shift back to large scale manufacturing, small businesses need to keep hold and explore opportunities for more development into these industrial sectors.

Expanding a small business into Canada is a worthwhile opportunity, but complying with payroll in Canada is extremely difficult. Outsourcing payroll to The Payroll Edge can help your company manage Canadian employees while you use this new opportunity to grow your own business. 

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

Topics: Business Expansion

5 Mistakes US Companies Make When Expanding into Canada

Posted by Stacey Duggan

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Feb 6, 2017 9:00:00 AM

5-Mistakes-US-Companies-Make-When-Expanding-into-Canada.jpgAn increasing number of US companies are setting up shop in Canada, while others have plans to do the same. Unfortunately, expansions are often rushed in order to start profiting from a new market as quickly as possible, and this leads to mistakes being made.

Though the economic landscape is fruitful, strong, and steady, you must avoid making devastating mistakes when expanding into Canada. Here are the top mistakes that are constantly being made by US companies that cross the border.

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

1. Failing to Understand Canadian Employment Laws

Though Canada and the United States are similar in many ways, there is one distinct difference that must be considered: employment law. Once you start to hire Canadian employees, you must treat them, pay them, and manage them following Canadian employment standards—not the US standards that you’ve been used to following.

Many businesses expanding into Canada fail in this regard. They do not research federal and provincial/territorial laws, and thus, they fail to follow the required regulations. Whether it’s overtime pay, health and safety, human rights, payroll or anything in between, you must be compliant or you will face the consequences. Seemingly simple regulations such as drug testing employees is different in Canada, so ensure you do your compliance research.

2. Failing to Research the Market

Canadians may seem to love your brand. You may believe that you’ll make a great profit by expanding into Canada, but it’s important to understand just how large, complex, and costly of an undertaking it is to cross the border in business. If you don’t take the time to research your market, the demand, your competition, and the available talent, your new business venture could end up failing. Target’s failure in Canada is a great example of this mistake.

3. Employee Misclassification

We cannot begin to count how many US companies thought they could get away with classifying all of their new workers as independent contractors in order to avoid administrative headaches, employment standards, and additional costs, like insurance and payroll. Employee misclassification is bad for business, plain and simple. It is not worth the risk. The Canada Revenue Agency is strict and severe about the issue and violators will be prosecuted. This one mistake could ruin all of your plans of expanding into Canada.

4. Wasting Time Establishing an Administrative Presence

Before you can start operating in the Great White North, you have to establish an administrative presence in the country. This involves a lot of time and bureaucracy. You will need to set up accounts and infrastructure, register with the correct government bodies, and fill out a lot of paperwork.

Setting up an administrative presence can significantly slow down your expansion, which can harm your bottom line. Many US companies have made this mistake. Instead of falling into the same trap, partner with a professional employer organization. This will allow you to skip many time-consuming and tedious procedures that come with setting up shop, so you can get right to operating your new business as soon as possible.

5. Managing Payroll, HR, and Compliance Alone

As we mentioned above, Canadian employment legislation is complex but must be diligently followed. US companies often try to handle tasks like payroll, human resources, and compliance in house, which is extremely risky. It can lead to costly mistakes and non-compliance.

Instead, your PEO can take over the legal responsibility of your new Canadian employees and many of your administrative tasks, including payroll, human resources, and compliance. Partnering with a PEO is a smart risk management decision when you have little experience and knowledge of Canadian regulations in these areas.

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

Topics: Business Expansion

FAQ: Expanding American Businesses Into Canada

Posted by Ray Gonder

|

Oct 14, 2016 9:00:00 AM

FAQ-Expanding-American-Businesses-Into-Canada-.jpgBusiness growth is a welcome milestone for any company, but all growth comes with its own set of new challenges. If you're thinking about expanding across the borders between the U.S. and Canada, you may have questions about how to prepare for new venture opportunities. Find the answers to some of your most pressing concerns here.

Can I Expand My American Business into Canada?

Of course you can, and there are plenty of good reasons for doing so. Even if you think that you've tapped out all potential markets in the States, you can find new sources of revenue, new potential demographics, and a whole slew of opportunities waiting across the Canadian border, with only minimal cultural changes to account for.

Will I Be Able to Hire Canadian Workers?

If you want to expand business into Canada, it only makes sense to hire Canadians who can hit the ground running. However, there are some legal regulations you'll need to take into account before you start hiring foreign workers. For these reasons, it's advisable to consult with a knowledgeable HR firm before you even start laying the groundwork for finding Canadian employees.

How Can I Classify Canadian Workers for Tax Purposes?

There are a number of different ways foreign workers might be classified by your company that could affect how you calculate payroll taxes. They could be contractors, employees, or sole proprietors. Each designation carries with it different legal and financial requirements; small businesses in particular might find that hiring an outsourced payroll processing firm can save time and money, especially during tax season.

How Do I Pay My Employees in Canada?

Unfortunately, it's not as simple as paying domestic workers. You'll need to set up payroll in Canada that complies with the country's rules and regulations. Your current HR department may not be equipped or prepared to deal with the many nuances of difference between borders. Often, an outsourced payroll processing firm in Canada is preferable for handling the differences efficiently.

What About the Exchange Rate?

The similarities between the U.S. and Canada often appear so strong that we tend to forget about the crucial differences. Payment to Canadian workers should obviously come in Canadian dollars, but with an exchange rate that fluctuates by the day, even writing a cheque can prove a real hassle. Working with an outsourced payroll processing firm whose job it is to handle these exchanges can relieve stress from your domestic operations.

Still have questions about hiring practices across international borders? Contact our team of payroll and HR management experts today to discuss the unique demands of your expanding business.

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

Topics: Business Expansion

Why U.S. Companies Get in Trouble Hiring a Canadian Independent Contractor

Posted by Corinne Camara

|

Oct 5, 2016 9:00:00 AM

Why_US_Companies_Get_in_Trouble_Hiring_Canadian_Independent_Contractor.jpgAny company that has opened shop in Canada knows the process isn’t easy. Your organization will have to register with banks and insurance companies, as well as federal and provincial organizations, before they can actually start selling to customers in the Great White North. The stress doesn’t end there, though. Foreign businesses then have to worry about keeping up with another country’s hiring and payroll regulations in addition to maintaining their own back home. Even if their employees don’t get overworked, they need to worry about unnecessary mistakes. 

Some try to skirt this hassle with independent contractors. These workers aren’t subject to the same regulations as full-time employees, and managers can direct their workflow from the U.S., ensuring that all the work gets done without the need for foreign expansion. If this seems too good to be true, it is. Many organizations are ignorant about the rules governing independent contractors, and by the time they learn about these stipulations, it’s already too late. 

Don’t fall prey to the same mistakes. If you can avoid these four errors, you’ll be able to sell in Canada with no problems at all.

Worker Misclassification Will Cost You

When you hire independent contractors, you get away with a lot. You don’t have to pay these workers benefits or deductions for employment insurance (EI), the Canada Pension Plan (CPP), and other federal or provincial fees. Some companies try to take advantage of this and classify their full-time workers as contractors. Others are ignorant of regulations and do the same without knowing the consequences. Either way, it will land you in hot water. 

The Canada Revenue Agency (CRA) loses out when you misclassify employees, so you’ll suffer heavy fines if they catch you. You may also be subject to investigations, as well as lawsuits from old employees. After all, if they’re performing full-time duties, they deserve to have their tax and benefits accommodated and their work space and tools provided to them at no cost. Misclassification robs them of these features, and often this compromises their ability to do their jobs properly. This means that if you misclassify, you’re basically shooting yourself in the foot.

Your Employees May Not Live Up to Your Expectations

Even if you do classify independent workers correctly, you may not get what you’d hoped for. After all, these professionals can farm their work out to others, ensuring you’re another degree of control removed from the process. Contractors can also take on other jobs simultaneously. If you shudder to think that your employees will have to balance your work with others’, you should find another option.

They’re an Inconvenient, Temporary Solution

When you hire independent contractors, you’re basically just using a stopgap. The only reason you work with them is because they’re cheaper than establishing a branch of your company in Canada. But what if you want to expand your presence there? When you want to stop relying on seasonal labour or set up more intensive operations, negotiating with different contractors will become more work than it’s worth. Ultimately, when you hire independent contractors, you’re betting against your company’s long-term prospects.

Avoid These Mistakes with an Employer of Record

Employers of Record (EORs) ensure that you get all of the benefits of an independent contractor with none of the risks. They assume hiring responsibilities for your organization, but since they’re based on Canadian soil, you don’t have to go through any registration. These tax and payroll professionals know all of the payments and deductions they’ll have to make on your behalf, and they do it for you quickly and effectively.

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

Topics: Business Expansion

Business Expansion 101: How to Pay International Employees

Posted by Shannon Dowdall

|

May 16, 2016 9:00:00 AM

Business_Expansion_101-_How_to_Pay_International_Employees.jpgArguably, one of the most challenging aspects of business expansion is the question of how to pay international employees in an efficient and effective way. You need a process that benefits everyone. That said, it's rarely so simple. There's so much to consider, and finding a cohesive and simple method can take a lot of pre-planning and consideration. Especially for businesses new to the international market, this can become a massive obstacle for expansion, slowing down the process a great deal, making it hard to connect with your new employees and new locale. Thankfully, there are some tips on how to pay international employees. We've gathered them here.

Understand Local Laws and Customs

First and foremost, it's important to understand the environment you'll be expanding into – that means pouring over their labour and employment laws, since you'll have to abide by them in order to do business. It may seem tricky, but it's a critical step that can't be skipped. This includes human rights codes and health and safety regulations as well, all of which must be followed.

That's not to mention, of course, customs that should be observed as well. For example, in Portugal, overtime is quite rare and in some cases, restricted by law. This means you might not want to include that provision in your contracts, even if you're used to it. Entering a new place means learning a lot about how they operate, and the more you know, the happier your workers will be. Talking to a local accounting firm or employing local lawyers is a good way to learn not just about the written rules, but the unwritten as well.

Consider Exchange Rates

Foreign currency conversion plays a large part when it comes to how to pay international employees, especially for those new to business expansion in general. It can be difficult to budget out paychecks in a foreign currency—even more so if that rate fluctuates. Some businesses suggest working the budget out before hand and then converting the sum in one go for payroll purposes, though that can come with risks and gains depending on the current exchange rate. It's also critical to ensure that it's legal; some countries have limits on the amount of money that can be transferred at one time. That way, you can ensure you stay compliant and safe.

Some businesses entirely forgo the concern of exchange rates, and simply pay their employees accordingly in their own currency, which is another way to go. That said, exchange rates can have an impact on that as well – if a currency takes a dive, someone might be losing out. Carefully consider your options in this regard before you make your business expansion plan, since it will be very important to the future of your company.

Engage a PEO

There is an easier way, and it’s an option that's becoming increasingly popular as time goes by: engaging a professional employer organization (a PEO, also known as an employer of record). In effect, they can act as the legal employers of your workers, which means it would be up to them to ensure their payroll is done correctly, that their human resources are taken care of and, to top it all off, they're also responsible for helping you file your taxes within the new country as well.

When it comes to how to pay international employees, PEOs have been winning out simply for the sake of ease. Business expansion is a messy enough situation without having to worry about complex legal and payment issues, and that's where PEOs have you covered. They're legal experts, payroll aficionados, and human rights professionals—they handle everything for you and all you need to concern yourself with is a simple invoice.

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

Topics: Business Expansion

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