When it comes to expanding into another country, there is no “have your cake and eat it too” option for businesses. If you want to operate officially within a new nation, you generally have to create new bank accounts and insurance policies, register with both federal and provincial departments, and more. This process drains your time and resources alike, and that’s before you start making decisions about hiring and other day-to-day concerns.
As a result, many organizations choose to avoid the process entirely by hiring independent contractors. These workers carry out a company’s business in another country and receive payment for it, saving the enterprise from the bureaucratic and financial hazards inherent to expansion. This practice also saves businesses money because their independent contractors don’t qualify for benefits such as pension plans or employment insurance.
But while independent contractors can ease the growing pains of an expanding business, they present risks of their own, especially in Canada. Organizations such as the Canada Revenue Agency (CRA) employ very precise standards and rules governing the use of independent contractors, and failing to follow them can result in disastrous fines. These tips will tell you everything you need to know if you need to know how to hire an independent contractor from Canada.
Make Sure the Worker is Officially an Independent Contractor
When you hire north of the border, you need to understand what sets an independent contractor apart from a full-time employee. The CRA’s website features some basic definitions, but it’s a trickier issue in practice than in theory.
Generally, self-employed contractors don’t require oversight from a company representative. The employer offers them work and they can choose which tasks they would like to complete. Furthermore, independent contractors don’t owe their employers any exclusivity. They can work with any other company during or after their term with an organization. This independence also means that they usually possess the tools and work environment necessary to carry out their assigned work, so employers don’t usually have to furnish them with anything. Independent contractors can also sub-contract their work to other organizations (so long as they foot the bill for it) and hire their own workers. That said, they are also responsible for paying any expenses they incur and holding up their end of the agreement with the employer.
Businesses must keep track of these regulations, as well as many others, and know their contradictions and exceptions almost intuitively. While this is a difficult task, it’s also a necessary one. The CRA unsparingly penalizes companies that misclassify their employees, so if you fail to take due care of your workers, you may find yourself on the receiving end of a heavy fine. So how can you follow the rules properly without having to spend the time and resources it would take to actually set up a presence in Canada?
Work with an Employer of Record
Employers of record (EORs) are as close to a best-case scenario as you can get. They take on hiring responsibilities in Canada with your approval, saving you from expanding northward. If you work with an EOR, you needn’t worry about providing benefits, filing taxes, or taking on human resources duties, as they tend to handle these tasks for you. Employees are less likely to be misclassified, as these enterprises often include workers who are well versed in Canadian employment and tax regulations. Best of all, EORs are affordable for many companies, so if you’re not sure how to hire an independent contractor from Canada, they will be able to address your concerns without costing you a bundle.