Operating an American business in Canada isn’t as simple as skipping across the border. Sure, you can take advantage of the low corporate tax rate and similar market that the true north offers, but doing so means your business will have to adapt in a number of ways. If you’re not prepared to make these changes, though, you can hire a payroll services provider such as an employer of record (EOR). These organizations know the nuances of the Canadian payroll system and can help you make the transition seamlessly.
Still, you may have some questions about finding payroll services in Canada for U.S. companies. Here are some frequent queries that businesses face when they consider expanding into a new country:
Why Do I Need Payroll Services?
There are a number of reasons for seeking payroll services in Canada for U.S. companies. EORs are already registered with the necessary government agencies, so working with them saves enterprises from having to complete this work themselves. They also hire experts in Canadian business regulations and tax codes. These workers not only know everything necessary to run your payroll and human resources departments, but they also stay up to date on regulatory changes and amendments. For example, while an American company’s payroll department may classify a worker as self-employed, organizations like the Canada Revenue Agency (CRA) may see that same person as a full-time worker. This mistake could result in a large fine that could have been avoided. If you work with an EOR, you’ll never be caught flat-footed by costly errors.
What Does an EOR Agreement Do?
EOR agreements establish the terms between your company and the payroll services organization with whom you have partnered. When making this contract, a company can set down specific conditions that dictate which types of employees the EOR can hire. Usually, these documents outline workplace rules regarding safety, violence, and harassment, as well as information regarding insurance. An EOR will also ensure that you don’t violate any labour laws through this agreement. For example, you may be unaware of how many hours an employee can work in a given week. An EOR will know this information and ensure that your contract with workers remains fair and legal.
Can I Still Get My Employees to Sign a Non-Compete Agreement?
It’s important to protect your business when signing contracts with employees. A worker may join your company for a short time and then leave, suddenly taking your clients with him or her. However, the rules regarding non-compete agreements differ between Canada and the U.S. Often, when U.S. companies try to get Canadian workers to sign these documents, the contract proves to be too restrictive. If an agreement dictates that an employee cannot compete for a long enough period of time in a wide enough geographic area, it can be easily struck down in court. Canada’s precedents regarding non-compete clauses tend to side with employees more often than with employers, so these documents tend to put companies at a disadvantage.
Instead, EORs tend to have American companies include non-solicitation clauses in their contracts. When they sign these documents, employees agree to refrain from soliciting an agency’s clients should they leave the company. You can also protect your trade secrets and methods with a non-disclosure agreement, which will prevent employees from sharing valuable information with future employers should they leave. EORs can help you craft the best agreements possible. They’ll make sure employees receive agreements with the proper clauses at the proper time, saving you the hassle of drawn out negotiations and potential court appearances.