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FAQ about Payroll Services in Canada for U.S. Companies

Posted by Ray Gonder

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Aug 22, 2016 9:00:00 AM

FAQ_about_Payroll_Services_in_Canada_for_U.S._Companies.jpgOperating 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.

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

Topics: Canadian Payroll Services

How Canadian Payroll Service Providers Can Save You Time and Money

Posted by Corinne Camara

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Apr 29, 2016 9:00:00 AM

How_Canadian_Payroll_Service_Providers_Can_Save_You_Time_and_Money.jpgIt's in the best interest of any business to always be striving to improve—whether that means trimming the budget, focusing on efficiency, or just finding better methods of operating. Generally, one of the most difficult areas of business when it comes to improvement is human resources and payroll, whether you're business is small or large, a startup or a multinational corporation. Human resources and payroll are both extremely complicated processes, and while they're non-core, they're absolutely vital to any business.

This is why many businesses have turned to Canadian payroll service providers. Their increasing popularity is just one reason why they're worth keeping an eye on. We’ve listed some other benefits below.

Three-in-One Expertise

When it comes to payroll and human resources, things can get intense. When you combine legal problems with employee management and top it with complicated large scale accounting, it's no wonder so many businesses suffer from headaches. For many companies, there's a lot of pressure when it comes to developing a proper payroll department—they need to consider human resources as well, and often end up with a gap where they'd benefit from a legal mind. Simply put, many just can't afford it and end up struggling to work with what they have, usually skipping the legal department altogether. The oversight can cause costly, time-consuming problems, such as employee misclassification.

When you partner with a Canadian payroll service provider, you're getting an affordable, specialized expertise. Those working with a provider are trained in everything they need to know—payroll, HR, applicable laws—and kept constantly up-to-date to boot. This means they can handle any issues that arise, whether common or unexpected, helping you cut down on time spent worrying. This also helps you dramatically mitigate your risks when it comes to costly errors—whatever the issue, they've seen it before. This is just one of the reasons why Canadian payroll service providers have become such an attractive option! You can fill in all those gaps without any added costs.

Put Your Assets to Better Use

Your assets aren't just your time and money, but your people, too. For small businesses and startups, one of the biggest concerns is how to manage things like payroll and HR with such few people in an effective way. When your team is small, even a single sudden issue can slow the whole process down and set into motion some serious delays. Your people are talented, but with a limited budget to back them up and such a narrow margin for errors, it can cause problems.

When you deal with Canadian payroll service providers, you can delegate all those peripherals to the experts—freeing up your own team to work on critical areas of your business. This means a shorter turn-around and a single invoice once every pay period to worry about, which means a lot less money is spent. As for your people, they can find fantastic uses in other areas within the company. For example, someone with a great deal of human resources experience could be comfortable in a managerial position. An accountant would make an excellent addition to the budget committee. Creative placement is becoming a more popular option as people deal more and more with Canadian payroll service providers, and it's time to consider your options.

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

Topics: Canadian Payroll Services

Employer of Record Service: Your American Business Presence in Canada

Posted by Ray Gonder

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Mar 26, 2014 10:21:00 AM

American Business Expansion into Canada and when you should contact the Payroll Edge for our Employer of Record Services Great! Your expanding operations north of the border but with your American business expansion into Canada you wonder; How am I going to pay my Canadian employees?

Unless you are using an Employer of Record Service in Canada (similar to a PEO in the U.S.) and want to hire an employee you must register your business with the Canadian government. Federally registering is the first step and then registering a business presence in each province and / or territory (Canada has 13) you are operating in would be the next step. Of course this process can be even more complicated if you are a Limited Liability Company (LLC) in the US as Canada has no similar status and again has different rules depending on the province or territory.

Other Government Accounts U.S. based companies will need to pay Canadian Employees;

Registering your business is not the only registration you will do as a new business in Canada. You must also apply for a payroll tax account number into which you will remit the employer and employee taxes for the Canada Pension Plan and Employment Insurance.

These two taxes are in every province and territory across Canada with the difference being that each province has its own rate in which these taxes are calculated. Keep an eye on the rates as they often change for each province at the beginning of each year and its important to know when paying a Canadian. Some provinces have other payroll taxes such as the Employer Health Tax in Ontario and the Health Services Fund in Quebec so it’s important to know what other type of taxes are associated with the province the work is being done in. It’s worthy to note that as a company in Canada, you will be given a weekly, semi-monthly, monthly or quarterly deadline for these payroll taxes but for those provinces that have extra taxes (like the 4 provinces that have a health care tax) your deadlines might be on a different schedule. The Canadian Government will not hesitate to apply interest and penalties to slow paying accounts.

The best advice an American company should take when hiring workers in Canada is to use a Canadian Based Employer of Record service. Using an EOR like The Payroll Edge enables U.S. based companies to focus on their core business rather than learning a whole new payroll entity. Contact The Payroll Edge today! 

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

Topics: Payroll Tax in Canada, Payroll Tips, EOR, Employer of Record, Payroll Tax Tips, U.S. Business operating in Canada, Paying a Canadian, Canadian Employer of Record, American PEO, Payroll Tax Laws in Canada, American Business in Canada, Canadian-Based EOR, Canadian EOR, PEO Services, Canadian Payroll Services

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