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Doing Business in Canada, eh? Top 5 Differences US Employers Need to Know

Posted by Stacey Jones

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Aug 15, 2019 9:00:00 AM

redWhen it comes time to expand their business, many American business leaders and owners look to the Great White North. Canada makes sense as your first international market. There are so many similarities between the two countries, success may seem like a guarantee.

Doing business in Canada can prove to be a stumbling block for expanding companies. Although Canadians have much in common with their neighbors to the south, there are also plenty of differences. That’s especially true regarding employment law and managing your employees.

If you plan to hire Canadians to staff your operations, keep these five differences in mind.

1. Payroll for Doing Business in Canada

Payroll is already confusing enough in the United States. When you step over the border into Canada, a whole new set of rules come into play.

At first glance, Canadian payroll may not seem too different than its US counterpart. You calculate how much you owe your employees, you take certain deductions, and you remit those to the Canada Revenue Agency.

Unfortunately it’s not that simple. Canadian law imposes different penalties, different payment schedules, and even different record-keeping obligations on employers. You must be aware of all those differences as you administer payroll.

2. Holidays and Vacation Pay Are Mandatory

Another major difference between employee compensation in the US and Canada is holiday and vacation pay. In the US, both of these are almost entirely optional. If you want to pay your workers for a holiday or give them two weeks of paid vacation, that’s your choice.

In Canada, both are mandatory. Certain holidays are considered statutory, which means employees must be given the day off and paid for the day.

Paid vacation is also non-optional. Employers are expected to set aside a certain amount, often equivalent to a percentage of an employee’s salary or average earnings. This is then used to fund an employee’s vacation entitlement.

Rates of pay for holidays and vacations, as well as the amount of time off, are set by the provinces. That means the rules vary from place to place. An employee in Quebec will be paid differently than one working in Ontario or BC.

3. Health Insurance Is Supplemental

The Affordable Care Act created an obligation for American employers to offer health insurance to their employees. Employers are still able to choose the plan they offer and the provider they work with. Health insurance can act as an incentive for hiring the right talent.

In Canada, the situation is quite different. Canadian employees still like employers who offer health insurance as part of their benefits, but the policies are considered supplemental. Most Canadians are covered by the publicly funded system, so their private insurance usually extends to medical expenses that the provincial programs don’t cover.

Your Canadian employees probably won’t be interested in hospital care or coverage for visiting the doctor. Instead, look for ways to offer them coverage for the care they need, such as dental visits, eye care, or prescription medications.

4. Paid and Unpaid Leave

Another difference US employers encounter when they’re doing business in Canada is the robust set of paid and unpaid leaves Canadian workers are entitled to. Although it varies by province, almost every Canadian employee is entitled to some form of paid or unpaid leave.

Parental leave, for example, is covered for up to 18 months by the federal Employment Insurance program.

5. At-Will Employment Does Not Exist

One of the most jarring differences for US employers operating in Canada is the relationship between employers and employees. In the US, employment is considered “at will.” Either the employer or employee can end it without concern.

The same is not true in Canada, where employers must provide adequate notice or compensation to employees upon termination.

These are just a handful of the differences you’ll find when you’re doing business in Canada. Working with a PEO can help you navigate these issues and help your business succeed north of the border.

Topics: Hiring Canadian Employees, Overseas Workers, Manage Employees Overseas, business expansion into Canada

Should I Get a Professional Employer Organization in Canada?

Posted by Stacey Jones

|

Jul 31, 2019 9:00:00 AM

torontoYou’ve been toying with the idea of expanding your business on a more global scale, and the Great White North is your next market to explore. It makes perfect sense for almost any American firm. The US and Canada have a good trading relationship, share the world’s longest unguarded land border, and have similar cultures.

The same factors that make Canada such a great choice might also contribute to mistakes American companies make as they come north of the border. How familiar are you with Canadian payroll or the tax system? Do you know how workers’ compensation is handled in the province you want to operate in? What about the varying employment labor laws?

These questions and the others that go along with them can feel overwhelming for a company exploring the Canadian market. The solution may be to look for a helping hand. A professional employer organization could be the partner you’re looking for.

What Is a Professional Employer Organization in Canada?

First things first: what is a professional employer organization anyway?

In the United States, professional employer organizations are distinct from employers of record. The EOR is solely responsible for the people working for your business. A PEO, on the other hand, is more like a co-employer.

The professional employer organization helps you manage your Canadian employees. The PEO will provide assistance with payroll, legal compliance, and workers’ compensation.

They also offer support for health and safety and human resources, among other services.

How a PEO Helps

Many American business leaders find themselves at a loss when entering the Canadian arena. Each province and region represents its own distinctive market. Complicating the situation more is the mix of federal and provincial rules. You’ll need to be familiar with provincial employment law and CRA rules about payroll, as well as federal and provincial taxes. 

Working with a PEO in Canada can instantly clarify the situation. They’re already established in Canada, and they’ll be able to provide the services you need quickly while guaranteeing  compliance with the rules.

Better yet, the PEO lifts some of the strain from your team. If your HR team is having a difficult time sorting out Canadian federal and provincial taxes, it’s not a problem. The PEO will take care of payroll for you and help with tax forms too.

The PEO essentially makes it easier for your business to manage Canadian workers the right way.

Avoiding Costly Missteps

Errors can be costly for businesses, especially small operations. Mistakes on your tax forms or non-compliance with employment law in your province could ground your Canadian aspirations before your business has a chance to take off.

Consider that the CRA penalizes employers for late payroll remittances. If your payment is even one day late, the CRA may charge you an additional three percent. The penalties only climb from there.

Having that money in your pocket is a better plan. When you work with a PEO, they’ll help you avoid making those mistakes in the first place, so you don’t need to worry about the risks.

Keep Your Workforce Happy

Teaming up with a professional employer organization is a smart move for American business leaders looking to crack the Canadian market. Working with a PEO can help you provide the right HR services to your Canadian team.

 

In turn, they’ll likely be more content and more inclined to stick with you for the long term. In a competitive market where your people can help you stand out, that’s an enormous advantage.

If you’re thinking about expanding to Canada, get in touch with the experts and discover what a professional employer organization could do for you.

Topics: PEO Services, Canadian PEO, Canadian Payroll Provider, business expansion into Canada

How to Simplify Your Business Expansion into Canada

Posted by Stacey Jones

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Mar 9, 2016 9:00:00 AM

How_to_Simplify_Your_Business_Expansion_into_Canada.jpgA lot of companies have been considering business expansion into Canada, with many more hoping to take the leap in the new year. Canada is a large, diverse country with a great deal of opportunity and a lot of untapped potential in terms of the market. Business expansion just makes sense. That being said, there is always some sort of barrier and, regardless of country, it tends to be administrative in nature.

You have new laws to consider, a new environment and marketplace to familiarize yourself with, and a healthy amount of bureaucracy to wade through before you can begin. The process doesn't have to be completely painful, however—there are ways to make it simpler that can benefit everyone.

Think (and Research) Ahead

Any business expansion into Canada, of course, needs to start with a plan. But that's not the only thing. You need to consider the administrative process involved in effectively starting a “new” business. This means registering with the Canadian Revenue Agency (the IRS of Canada) and obtaining a business number. Without a business number, you're unable to operate on any level within Canada. That means no hiring, no sales, no offices, and no ads. It's a very critical step.

Once you have your business number, you'll have tax accounts to deal with. This means you'll want to do some pretty intense research to ensure you can meet Canadian tax codes, as well as comply with local, provincial, and countrywide labour, employment, and human rights laws. Health and safety laws also need to be taken into account. Your business expansion into Canada means learning and following all Canadian laws.

On average, registration takes a few weeks or months, but can often end up taking longer than expected, depending on the complexity of your filing, the size of your company, as well as several other factors. You'll want to plan ahead for some extra time so you don't miss any important deadlines, or jump the gun on any important decisions. If this all sounds like a lot of trouble, there’s another way to simplify your business expansion into Canada: a professional employer organization.

Consult a PEO

A professional employer organization (or, an employer of record as they're known) is by far the easiest path to simplification. Given all the work involved in business expansion, it's no wonder that so many businesses decide against it—even if it hampers international growth and opportunity. That said, PEOs and EORs are becoming increasingly popular for their services and a favourite of those who want to expand. Consulting a PEO means you can skip administrative woes and get started in Canada faster.

A PEO already has a Canadian presence. That means a business number, tax registration, appropriate banking and financial infrastructure, and everything else required. When you partner with one, they're hiring employees on your behalf—they pay them, they handle human resources, they even file your taxes for you—and all of that means you can skip the whole registration process and get started sooner. Naturally, you still retain control over operations as well as employees, which means all the oversight you require with less work. PEOs are not just payroll experts, but they also specialize in human resources and legal compliance, which rolls several departments into one. If you’re a business that partners with a PEO, you’ll save a great deal of money, resources, and time.

Consider how simple your business expansion into Canada could be if you could set your schedule ahead by several months. Talk to a PEO and find out just how simple it can be.

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

Topics: business expansion into Canada

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