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The Wrong Ways to Expand into Canada

Posted by Corinne Camara

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Apr 24, 2019 9:00:00 AM

The Wrong Ways to Expand into CanadaLike most business owners, you see growth as a measure of success. Expanding into international markets is certainly an indication of growth.

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When you begin moving into other markets, though, you’ll need to take steps to secure your success. This is very true when you plan to expand into Canada. There are right ways and wrong ways to go about managing expansion into the Great White North.

Being aware of some of the wrong ways can help you avoid the missteps others have made before you. Learn about these mistakes as you plan your expansion, and you’ll be better prepared.

Don’t Plan to Expand into Canada Rapidly

Perhaps the best example of this misstep comes from US retailer Target. In 2011, Target bought up a number of locations in Canada and opened 124 stores in the span of less than a year in 2013.

The chain ultimately opened 133 stores before closing up shop in 2015. While there were numerous mistakes made in the Target saga, one of the key factors was rapid expansion. If Target had opened a few stores first, it could have focused on working out issues like supply chain management on a smaller scale.

Many companies have used the slow expansion model to conquer the Canadian landscape, and it generally works much better. If your brand isn’t as well-recognized as Target, take heed. Even popular brands can fail if they take on too much too soon.

Study the Culture

There are many cases of businesses experiencing culture shock when they expand to an international market. You merely need to look at the example of Mattel marketing Barbie in China. Chinese culture emphasizes educational toys and skill-building, so Barbie didn’t fare well.

In some cases, the differences in culture are much more subtle. This is certainly the case in Canada. Canadians share many cultural similarities with their American cousins, but that doesn’t mean their culture is the same.

Take some time to study Canadian culture before you expand into Canada. Whether you’re looking to connect with your employees or market to consumers, understanding cultural nuances will go a long way to ensuring your success.

You Ignored Market Trends

British supermarket Tesco tried to expand into the US in 2007, in what was a case of poor timing. Tesco’s messaging about fresh food appealed to US consumers, but the economy was on the brink of the worst recession since the 1930s.

It’s not just the economic indicators you’ll want to pay attention to when you decide to expand. You’ll also want to take a look at the competition. If your market is oversaturated, you’ll have an uphill battle to convince clients to switch to your business. If there’s no competition, are you looking at an underserved market or a non-existent one?

Doing your market research is imperative when you want to expand into Canada or any other market. Don’t forget to look at historical trends as well. If the market is shrinking, you want to know before you head across the border.

You Got Caught up in Red Tape

You hired a Canadian employee, but you forgot to file the paperwork. When it came time to let someone go, you fired them on the spot and didn’t pay termination pay. You aren’t sure about the rules regarding tax withholdings, overtime pay, or vacation time.

Legislation can protect you, your business, and your employees. It can also lead to noncompliance as you expand into Canada. Make sure you’re aware of the employment regulations and how they affect your business.

You can avoid all these mistakes and more when you work with an experienced PEO. If you need a helping hand as you expand into Canada, get in touch with an expert team today.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

5 FAQs about Expanding Your Business from Canada to the US

Posted by Stacey Jones

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Apr 3, 2019 9:00:00 AM

5 FAQs about Expanding Your Business from Canada to the USExpanding a business from Canada to the US is often a logical move for Canadian entrepreneurs. For some people, it may even be a goal.

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The US is the nearest international market. It’s also one of the largest markets in the world, and Canada and the US share close economic ties and similar cultures.

As you consider expanding your business, though, you likely have some concerns. This is perfectly normal. Many people ask questions about this very subject. Here are a few of the most frequently asked questions and their answers.

1. How Do You Go about Expanding Your Business to the US?

The first step in crossing the border to the US is setting up as a subsidiary company. Generally speaking, you’ll have the choice of setting up the business as a limited liability company, a C corporation, or an S corporation. You may have a few other options, depending on the type of business you run.

The process for setting up the subsidiary can be quite lengthy, so it’s best to make this decision early on in the expansion process. You’ll want to consider taxation, as each type of business entity is taxed differently. The state you operate in may also affect taxation, as well as the shape your business takes.

You can expect to spend three or four months setting up the subsidiary.

2. Which State Should I Penetrate First?

This is a question each individual business owner will need to answer on their own. That said, the state of Delaware is a popular choice for foreign businesses for a few reasons.

Delaware has a relatively low rate of corporate tax, which makes it more attractive to foreign companies looking to gain a foothold in America. Another reason some businesses choose Delaware is that the state provides a relatively simple set of corporate structure and tax rules.

Setting up in a state like Delaware can help you begin doing business across the US. However, each state offers its own advantages and disadvantages.

You’ll want to consider access to your target market and access to infrastructure and resources. Even the job market can have an impact on your decision. If you’re looking for computer engineers and software designers, for example, you might find an abundance of them in California.

3. How Can You Reduce the Risks of Expanding to the US?

The US market is one of the world’s largest, but it also has a reputation for being difficult to penetrate.

Entering the American market can be a risky venture. It’s only natural that business owners like you would look for ways to mitigate those risks.

One option you have is to work with a professional employer organization (PEO) who has expertise in the US market. This partner can help you navigate the web of US laws, ensure compliance, and even fund payroll. They can also assist with some of the paperwork and other administrative functions.

4. How Can You Determine Whether Your Company Is Ready for the US Market?

Another common question is how to know when it’s right to consider expanding your business into the US. A little prep work can help you determine whether your business is ready to cross the border.

You should conduct thorough market research and competitive analysis. Also, take a look at your finances. Finally, make sure you discuss the decision with a business advisor.

5. Who Can You Ask for Help?

These are only some of the questions you may have as you consider expanding your business to the US. You probably have more. Who can you ask for help?

Business advisors, lawyers, and other corporate experts are good choices. A PEO can be an excellent resource as well.

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Topics: Business Expansion

Global Companies: 5 Challenges to Employing US Workers

Posted by Karen McMullen

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Apr 1, 2019 9:00:00 AM

global-companies-5-challenges-to-employing-us-workersYour business is on the move, and your next target is the coveted American market. Like many global companies before you, you’re confident that you’re ready to face this challenge.

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Opening a US office or starting up operations in the US market means hiring American workers. The American labour market comes with unique challenges. Some of them are cultural, while others are legal.

Whether you’ve just hired your first American worker, or you already have a few US workers on your payroll, keep these five challenges in mind.

1. Global Companies Are at Risk of Misclassifying Employees

Can you explain how the IRS defines a contractor? If not, you’re not alone. Many business owners can’t, whether they’re running an international business or the US is their home base.

A lack of familiarity with American regulations causes some trouble for international employers, putting them at higher risk of misclassifying their workers. The IRS and several states have started cracking down on misclassification in recent years.

Take care that you review the definitions of both 1099 workers and other employees. This will help you avoid misclassification and the associated penalties.

2. State Law Can Vary from Federal Law

Learning the legal framework of any new country is a big task for companies looking to expand beyond its borders. This usually results in a lack of familiarity with an employer’s legal requirements.

In the United States, the situation can become increasingly complex. You’ve acquainted yourself with the federal legal framework, but laws change from state to state.

Minimum wage is one example. The federal government has set a minimum wage, but many states have enacted their own minimums. For each state you operate in, you’ll need to ensure you’re acting in compliance with the law.

States may also have their own laws around working hours for certain industries and even how you terminate employment with an employee. Before you hire an employee in any given state, you’ll want to check the fine print on these points.

3. Payroll Deductions and Remittances to the IRS Are Challenging

Another challenge for global companies is payroll deductions and the remittances they must send to the IRS when they employ American workers.

As the employer, you’ll be responsible for withholding income tax for your employees. How much you withhold from their paycheck depends on how much they earn.

You’ll also need to withhold for social programs like Medicare and Social Security. These withholdings have to be remitted to the IRS on a regular basis, usually in accordance with how often you conduct payroll.

As a result, administering payroll and sending payments to the IRS is a big challenge for most employers. Global companies can get the help they need by partnering with a professional employer organization (PEO) that offers payroll processing services.

4. The Job Market Can Pose a Challenge

Unemployment in the US has dipped over the last couple of years. There are fewer workers on the market as a result.

This situation can pose challenges for global companies who are searching for top talent. Your choice of state can also affect your hiring options. If you’re hiring in an area where the talent pool is relatively limited, you may have to pay more competitive wages.

Learning the job market is often something that happens after you’re actively seeking out new employees.

5. You May Need to Adjust to Employee Expectations

Cultural challenges can crop up in almost any aspect of the employer-employee relationship. Your employees may expect you to offer certain benefits or that they’ll receive certain amounts of time off.

They may also expect that you’ll communicate with them in particular ways.

Obviously, global companies have plenty to think about when it comes to hiring US workers. Getting a helping hand from a PEO can help you navigate the employee-employer relationship with ease.

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Topics: Business Expansion

Expanding into Canada? How to Avoid the Problems Target Faced

Posted by Anna Mastrandrea

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Mar 27, 2019 9:00:00 AM

Expanding into Canada How to Avoid the Problems Target FacedExpanding a business can be an exciting opportunity and a monumental challenge for any management team. Even American companies expanding into Canada can face an uphill battle when finding success beyond the 49th parallel.

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One of the most infamous examples in recent memory is Target. The US retail chain thought it saw an opportunity in Canada when fellow retailer HBC closed its discount chain, Zellers. Target moved swiftly, buying up previous Zellers locations. Canadian consumers, who had been lobbying for Target for years, celebrated, and success seemed all but guaranteed.

Even in the first year of Canadian branch operations, however, there were signs of trouble. Within two years, Target announced it was shuttering the doors on its Canadian experiment.

The move left the business community asking, “What went wrong?” As it turns out, Target made a number of missteps when entering Canada. If you’re planning a Canadian expansion, heed these lessons and avoid making the same errors.

Conduct a Thorough Market Analysis

One of the biggest problems Target encountered was that top brass didn’t fully understand the Canadian market before crossing the border. This led to a number of problems, from market strategies to issues with the supply chain.

It’s easy for American businesses to assume they know how to deal with supply chain logistics. After all, the US is a geographic giant with many of the same geographical features and challenges. In Canada, however, issues within supply chains snowball due to smaller population centers. Servicing the same number of stores spread across the same area is even more costly and difficult when the population you’re working with is less than half of an American population.

The other major issue with Target’s market analysis was that it didn’t accurately portray why Canadians loved the brand. In addition to the empty shelves caused by supply chain issues, Target also failed to bring the exclusives it boasted in the US. Management mistakenly thought the excitement expressed by Canadian consumers was for low prices. If that had been the case, Zellers would have survived Walmart’s incursion.

Instead, Target made the error of going toe-to-toe with Walmart by offering low prices. It also tried to compete with other Canadian retailers, such as supermarket giant Loblaw’s, which offers chic, affordable fashion alongside groceries.

Take Smaller Steps

Within its first year, Target’s executives were admitting the retailer had bitten off more than it could chew with its Canadian expansion. This was apparent in the supply chain issues mentioned above.

Target overestimated enthusiasm and misunderstood what Canadians thought its brand offered. This led to overconfidence, and the brand bought up many former Zellers locations in short order, expanding rapidly throughout the country.

Opening fewer locations would have allowed for a more controlled, cautious expansion process. This, in turn, would have allowed Target to experiment on a smaller scale. The supply chain issues could have been resolved before they became widespread problems affecting thousands of Canadian consumers.

Tailor for Canadian Sensibilities

A slower expansion also would have allowed Target to tweak its Canadian strategy. One of the problems Target encountered was a failure to translate. Again misreading the market, Target thought Canadians wanted a pure replication of what they found in the US.

This didn’t work. Canadian consumers who were unfamiliar with the brand saw no reason to shop there. Those who were already Target customers in the US complained about higher prices and lack of selection.

In short, Target alienated the people who had advocated for it and failed to appeal to Canadian consumers who were unfamiliar with the brand.

Your strategy must be aligned with the Canadian market. Although Canada and the US share some cultural similarities, a carbon copy of a US company rarely finds a foothold in Canada.

If you keep these factors in mind, you’ll have a better chance at a successful Canadian expansion.

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

Topics: Business Expansion

Where Should You Expand? 5 Innovation Cities in the US

Posted by Ray Gonder

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Mar 20, 2019 9:00:00 AM

Where Should You Expand 5 Innovation Cities in the USWhen an international expansion is the next step in your business’s growth, careful selection of your destination is important. Conducting thorough market research can help you choose the right location opportunities. Some cultures will be more receptive to the products you offer. Some markets just aren’t ready for your services.

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When you’re investigating different locales, you may want to consider how innovative they are. Innovative cities often offer support to new businesses developing product and services. They may also be experimenting with other policies designed to incentivize new business.

If you’re looking to establish your US branch in an area known for being innovative, take a look at this list.

1. San Francisco Is the Top Innovation City in the World

When thinking about innovation cities, you no doubt thought of California’s famed Silicon Valley. Perhaps surprisingly, California’s top-ranked city is actually on the other side of the bay. Silicon Valley is on the southern side of the San Francisco Bay Area but doesn’t include San Francisco itself.

That may be changing, as San Francisco is now the top-ranked innovation city in the world, at least by a few different measures. When it comes to the amount of investment capital in the area, San Francisco gets top billing.

2. In a New York Frame of Mind

If the technology-centered culture of the West Coast doesn’t have much appeal, you can look toward another hub of business activity in the US. On the Eastern Seaboard, New York City has always been one of the drivers of American business.

It’s little wonder, then, that the city that never sleeps manages to collect its share of investment capital. By some measures, it’s tied with San Francisco and San Jose, so you won’t go wrong by choosing this East Coast alternative.

3. History and Innovation Collide in Boston

When you think of Boston, you may think of the city’s historical association with events like the Boston Tea Party. Or you may think of their sports teams. Some people will even associate Boston with its academic and literary scene.

In the past, Boston was a center of both culture and business, and that still rings true today. If you need proof of the city’s innovative roots, simply look at the nearby Massachusetts Institute of Technology (MIT).

MIT isn’t the only organization innovating in one of America’s most historical cities. Depending on the measure you use, Boston ranks within the Top 10 or even the Top 5 of innovation cities around the world.

4. LA Is a West Coast Hub of Innovation

San Francisco, San Jose, and the remaining Silicon Valley area generally steal the spotlight when people talk about innovation cities in California. You shouldn’t overlook Los Angeles, however, as the city ranks within the Top 10 on most measures. For example, it ranks seventh in the world in terms of investment capital.

One of the benefits of LA is its proximity to other major global hubs, such as Tokyo and Beijing. It’s also a stone’s throw away from Silicon Valley, which means you’re really getting the best of both worlds here.

5. Consider the Windy City

The American Midwest may seem to have been dismissed on this list, but you can look at Chicago as an example of Midwestern excellence. Although the Windy City currently ranks outside the Top 10 on a few measures, it’s still an excellent location to consider.

Although not as big as New York or LA, Chicago is still a major metropolis. It’s also an important central hub, connecting the East and West Coasts, as well as providing easy access to the Canadian markets.

Dozens of Other Cities

This list only includes some of the top cities, and it only considers a few measures. If you use different measures, another US city might be the right innovation city for you. Dallas–Fort Worth, Atlanta, and Denver could all be considerations for your business expansion.

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Topics: Business Expansion

How Long Should Employers Keep Employee Records in the US?

Posted by Anna Mastrandrea

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Mar 18, 2019 9:00:00 AM

How Long Should Employers Keep Employee Records in the USGood record-keeping is essential for your business. Keeping records is not only wise, but you may be required by law to have employee documents on hand. Because the length of time you need these records is often governed by law, deciding how long to keep them is often a matter of legal compliance.

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When you expand to a new market, it’s a good idea to check that your company’s record-keeping policies are in line with the local law.

How long should employers keep employee records in the US? It’s one of the most common questions for employers entering the American market. The answer depends, somewhat, on which records you’re talking about.

How Long Should Employers Keep Employee Records?

The easy answer to this question is you should keep employee records for as long as the law states.

Some employers may opt to store employee records longer than the law-stated minimum. Make sure you’re not violating any laws by doing so. New data laws, similar to the General Data Protection Regulation in the EU, could affect the maximum length of time you can keep records.

Other employers want to get rid of records as soon as possible. If you keep paper files, these could be cluttering up the office. Even digital files take up storage space on your hard drives.

What do US laws say specifically about keeping employee records? For payroll, the minimum length of time is three years. This includes employees who have terminated their employment with you.

Hiring records must be kept for at least a year after you’ve made an offer of employment. If you conduct drug testing during the hiring process or at any other point during employment, you’ll need to maintain records of the test for at least one year.

Other Record-Keeping Periods

How long should employers keep employee records of other events, such as benefits or requests for leave?

You’ll have to hang on to records of benefits and pension plans for twice as long as payroll records. The minimum length of time you need to keep these on file is six years.

If an employee makes a request under the Family Medical Leave Act (FMLA), you have to keep the records for three years. You must keep the paper trail even when you deny the request. Always carefully document leaves that are used intermittently.

Form I-9 should be kept for three years after you hire an employee, or up to one year after they terminate their employment with you. Try to keep this form separate from your personnel files.

Under the Fair Labor Standards Act, you’ll also need to keep collective bargaining agreements and performance appraisals. These must be maintained for two years after an employee resigns.

Other Laws to Be Aware Of

Most record-keeping laws are federal, but individual states can also apply their own regulations. For example, in Texas, you may need to keep wage and tax information records for up to four years.

You’ll want to review your record-keeping obligations under state law.

Other laws may affect record-keeping as well. For example, the US Equal Employment Opportunity Commission (EEOC) requires employers to keep all employment records for at least one year after the employee resigns.

If you’re following the rules about payroll and FMLA records, you should be complying with this requirement. You may want to double-check the list of records the EEOC says you need to keep on hand.

Another great example is drug testing. Some drug tests will fall under the usual rules for maintaining personnel records. If the job is related to transportation, however, you need to keep these records for five years to comply with the Department of Transportation’s regulations.

As you can see, there’s no single answer to the question, “How long should employers keep employee records?” It depends on the record, the law, and many other factors. If you’re unsure, you can always ask for help from a professional employer organization (PEO).

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Topics: Business Expansion

Canadian Business Owners: 5 Smart Reasons to Explore the US Market Now

Posted by Ray Gonder

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Mar 6, 2019 9:00:00 AM

Canadian_Business_Owners__5_Smart_Reasons_to_Explore_the_US_Market_NowMany Canadian business owners have big plans for their companies in 2019. Economic growth has been strong, and numerous businesses have been expanding.

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One thing you may have on your mind is international expansion. As you scope out markets and determine where to expand, you may have some preferences for different countries.

The US is one of the markets that may not be on your mind but most definitely should be. Some Canadian businesses opt not to expand into the US market first because it can be difficult to succeed in the market. You may also be hesitant because of the current environment.

There are so many smart reasons you should be considering the US market right now. Here are a few of them.


1. The Economy Has Been Strong

Like Canada, the US has entered a boom time of economic growth. Unemployment is low, and the American people are optimistic about their job prospects and career growth. This is a stark contrast to a few years ago when more negative outlooks prevailed.

Why is this good for business? High employment and economic growth usually result in people having more money to spend. This means they may be willing to purchase new products or services.

Businesses too have more capital at their disposal, which makes them more likely to invest in new technological solutions or services.


2. A New Trade Deal Is in Place

Another reason you may want to consider the US market now is that a new trade deal will be coming into effect shortly. Negotiations for the North American Free Trade deal, or NAFTA, had been dragging on for months, creating uncertainty for businesses doing cross-border transactions.

This was finally resolved in late 2018, with the signing of a new deal, the United States-Mexico-Canada Agreement (USMCA). As the deal enters into force, Canadian businesses may find some advantages to heading south.


3. The US Market Can Set You up for Success Elsewhere

The US market does have a reputation as being difficult to enter, which is why some Canadian business owners may choose to avoid it during international expansion, especially early on. They may decide to try their hand in a few more forgiving markets before attempting to expand to the US.

There is a compelling reason to go to the US first. Success in the US market often predicts success elsewhere. If you can succeed in this market, you may be more likely to succeed in almost any other market.

By concentrating your initial expansion efforts on the US, you’ll make expanding into other markets later easier. It’s also easiest to expand into the US market first since all your resources can be concentrated on this single expansion market, rather than several others.


4. Canada and the US Have Strong Ties

The strong ties Canada and the US have as trade partners is another great reason to consider expansion into the US. The new North American trade deal has already been mentioned. The two countries also have various tax agreements and other deals to make doing business with each other easier.

Canadians and Americans also share some cultural sentiments, which makes the US market more amenable to Canadian companies. You’ll still need to conduct careful market research.


5. Great Help Is Available

When you enter the US market, you’ll be able to get expert help and advice from a professional employer organization (PEO) that operates on both sides of the border.

If you’re planning an expansion any time this year, why not get in touch with a PEO today?

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Topics: Business Expansion

Expanding into Canada? 5 Considerations You Might Not Have Thought of Yet

Posted by Anna Mastrandrea

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Mar 4, 2019 9:00:00 AM

Expanding_into_Canada__5_Considerations_You_Might_Not_Have_Thought_Of_YetFor many US businesses, expanding into the Canadian market seems like a lucrative opportunity. This is especially true for American companies. Canada shares many cultural similarities with the US, and the geography is often similar. American business owners may feel they’re well-equipped to enter the Canadian market, and they perceive a demand for their products and services.

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

If a Canadian expansion is on your radar, there are many things you’ll need to consider carefully.


1. You’ll Need a Plan for Employee Severance

In the United States, employers and employees operate on the assumption of “at will” employment. This means that either employer or employee can choose to end the employment relationship at any time, without prior notice.

An employee who arrives to work today could be told not to return tomorrow, and this wouldn’t pose a problem.

In Canada, it’s a different story. Employees must be given proper notice of termination. This is often at least two weeks prior to the end date. For employees who have served for many years, the notice period may be longer.

If you don’t have time to give proper notice, such as in the case of mass layoffs, then you may need to pay severance instead. This will consist of paying the employees for the notice period. If an employee was entitled to two weeks’ notice and you only gave them one, then you’ll need to pay them a week of severance.


2. Sales Tax

You’ve likely thought a bit about taxation, but probably only within the context of how your business will be taxed. You may not have thought much about sales tax.

You’ll want to be sure you know the regulations for collecting tax in the province in which you operate. Federal sales tax of five percent applies throughout the country. Alberta doesn’t have a provincial sales tax, but Ontario applies eight percent. Quebec’s provincial sales tax is even higher.

You’ll need to collect and remit sales tax to the CRA as appropriate. If you don’t, it could result in penalties.


3. Income Taxes

Another tax issue you must contemplate before you expand into Canada is income tax. As a foreign company with sales in Canada, you’ll likely need to file income taxes.

It’s important to do this properly and on time, so as to avoid penalties. The penalties for not filing income tax can be significant. The CRA may decide to audit your records.

It’s important to understand the various tax treaties in Canada, and how your business structure affects what you’ll need to remit. Tax varies as the structure of the business changes, so you’ll need to explore the best option for your business.


4. The Treatment of LLCs

A limited liability corporation (LLC) is a common business structure for American companies. In Canada, LLCs are treated the same as any other corporation for taxation purposes.

This limits your ability to create a “flow-through entity,” which allows your income to be taxed in one country but not the other. This could create a situation where you face double taxation, so be sure to review your business structure options.


5. The Need for Counsel

When you decide to expand your business into Canada, the best thing you can do is get expert advice. Whether you’re trying to determine what business structure is best for you, or you want to know more about the regulations for employment, seeking advice is prudent.

One great option to consider is to get in touch with a professional employer organization (PEO) that operates on both sides of the border to ease the expansion process.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

5 Tips for Franchise Chains Heading into Canada

Posted by Ray Gonder

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Feb 25, 2019 9:00:00 AM

5_Tips_for_Franchise_Chains_Heading_into_CanadaMany American franchisors look towards the Great White North as the site of their first international expansion. It makes perfect sense. After all, Canada has similar geography and a similar culture. Many US brands see Canada as an extension of the US market to some degree.

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It’s why brands like The Cheesecake Factory and Chick-fil-A have moved across the northern border. This assumption, however, is also the reason why giants like Target can fail to expand into Canada successfully. The Canadian market is often more different than corporate decision-makers account for.

If you’re planning to expand, take a look at some of these tips. They’ll help you manage your move into Canada successfully.


1. Make Sure You Understand the Legal System

Canada and the US have multiple levels of government. The federal level governs the entire country, while states or provinces govern their various territories. In both countries, you must pay attention to both federal law and state or provincial law.

You’ll want to make note of some differences in Canada. Many of the regulations that are considered federal-level in the US fall to the provinces in Canada, and vice versa. For example, in the US, unemployment programs are handled at the state level. In Canada, the federal government administers the Employment Insurance program and the Canada Pension Plan. While Medicare and Medicaid are federal-level programs in the US, healthcare in Canada is handled by the provinces.

Employment law is also handled by the provinces in Canada. Pay particular attention to Quebec, which often has very different laws.


2. Employment Laws Are Very Different

One of the first shocks for American companies doing business in Canada is the difference in legal protections for workers. A great example is that “at-will” employment doesn’t exist in Canada.

In the US, it’s legal for either employer or employee to terminate the employment relationship with no further notice. In Canada, however, an employee often needs to be given notice of termination two or more weeks before the end of their employment. If proper notice isn’t given, the employer may be required to pay the employee severance.

There are also different regulations regarding time off, such as vacation entitlements and public holidays. Many provinces also have legislation about various types of leave, both paid and unpaid.


3. Consider Cultural Differences

Take some time to consider how well your franchise will export to Canada. Many Americans make the mistake of assuming Canadians share a very similar culture, which means everything that works in the US will work in Canada.

Target found this out the hard way. The brand’s Canadian expansion didn’t last because it couldn’t meet Canadian consumers’ expectations.

Do some research and discover the differences between your American markets and your intended Canadians market. The differences may be subtle, but it will pay to make appropriate adjustments before you open your doors.


4. Tax Considerations Need to Be on Your Radar

Another thing an American franchisor must think about is the tax implications of the franchise structure. The franchise fees a Canadian franchisee pays to you will likely be subject to tax withholding.

There can be other factors at play as well. You may want to incorporate in Canada in order to avoid those cross-border fees and taxes, but incorporations can be subject to different terms provincially. Some may require you to have a certain percentage of Canadians on the board of directors.


5. Do Your Research

Take a look at your target market and determine whether expanding into Canada makes sense. For some businesses, it’s a no-brainer, but others may want to carefully consider their decision.

With these tips, you can manage your expansion activities in Canada and beyond more successfully than ever.

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

Topics: Business Expansion

5 HR Compliance Mistakes International Businesses Make When Expanding into Canada

Posted by Corinne Camara

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Feb 18, 2019 9:00:00 AM

5_HR_Compliance_Mistakes_International_Businesses_Make_When_Expanding_into_CanadaTaking part in an international expansion is an exciting time. It can also be a stressful time. Once the initial excitement has died down, you might encounter mounting challenges.

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

This is often the case when a business enters the Canadian market for the first time. Even with the most careful research, most businesses still make a few missteps. Many of these fumbles occur in HR compliance.

HR compliance is crucial, but it’s sometimes overlooked. HR rules can be complex and often confusing.

Here are a few of the most common HR compliance mistakes international businesses make when they expand to Canada. Knowing about them beforehand can help you avoid them.


1. Not Knowing about Mandated Leaves

Canadian labour law is evolving rapidly. Many provinces have introduced significant updates in the last few years. One of the areas that has undergone change is employee leaves. In many provinces, employees are now entitled to more paid and unpaid leave for a wider variety of reasons.

You must pay careful attention to how many days of leave employees are entitled to for things like bereavement, loss of a child, and personal emergencies. These rules vary from province to province, so you need to research the standards based on your location.


2. Confusion over Public Holidays

Holidays are another common point of confusion for employers just entering Canada. As with leaves, there are provincial variations. The federal government does set out a schedule of holidays. For the most part, provinces follow them, but not every province mandates Boxing Day, for example.

The provinces are also free to set their own holidays, so you may be surprised to find Quebec has a few more holidays than Alberta or Ontario. Be sure to pay careful attention to the holiday schedule and determine which are statutory in nature.


3. Overtime Rules Get Complicated Quickly

A very common HR compliance stumbling block for international employers is overtime pay for Canadian employees. Again, the rules change based on the province, and sometimes from industry to industry.

As a general rule of thumb, employees can work 40 hours per week before they’ll need to be paid overtime. Shift lengths may also matter. If an employee works more than eight hours in a day, overtime may kick in.

As noted, however, this changes with the industry. In saw mills, for example, the work week may be 44 hours or more before overtime applies. Some provinces also make it possible for employers to offer lieu time instead of overtime pay.

It’s easy to see how someone unfamiliar with the rules could struggle. Consider working with a professional employer organization (PEO) for assistance.


4. Termination and Severance Pay Rules Are Different

This is an especially tricky point for American businesses, because the rules around termination and severance pay are vastly different in Canada.

In Canada, at-will employment doesn’t exist. Employees must be given proper notice of termination. The length of notice depends on the employee’s length of service. If the employer can’t provide proper notice, then they may need to offer severance pay in compensation.


5. Payroll and Benefits

When expanding internationally, employers often get stuck on payroll and benefits as well.You determined the holidays but are unsure of how to calculate vacation pay. What with holdings are required to satisfy the requirements of Employment Insurance and the Canadian Pension Plan?

You may also run into rules governing what you can and can’t do. For example, you can’t take the cost of a dine-and-dash out of a server’s pay in most provinces.

If you’re unfamiliar with the rules, the best thing you can do is get help from the experts. A PEO can identify where you need to adjust your policies to become compliant, and they can help you do just that.

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

Topics: Business Expansion

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