Home Blog

Blog

5 Benefits of Working with Canadian Payroll Providers

Posted by Karen McMullen

|

Aug 14, 2017 9:00:00 AM

5 Benefits of Working with Canadian Payroll Providers.jpgOne of the most important aspects of any business is payroll. However, it can also be one of the most complicated and time consuming aspects of running a business. Employees need to be paid, and you need to comply with regulations and laws. But it seems like there aren’t enough hours in a day to get it all done.

Download our free guide on what US companies need to know about paying  employees in Canada.

Working with Canadian payroll providers is one of the most efficient ways of handling payroll duties. Not sure how? Read on to see the top five benefits of working with Canadian payroll providers.

1. Expert Knowledge

Most business owners and payroll staff don’t have the time or resources to memorize the rapidly changing laws and regulations regarding employee classification, taxation deadlines, or government forms. Some smaller businesses don’t have the means to hire payroll staff at all. This leaves you in a tricky situation, trying to grow your business without the right resources.

Working with Canadian payroll providers ensures your business continues to run smoothly, without hiring a full-time payroll employee or learning all the regulations yourself. With an expert knowledge of HR and payroll, you can trust that your employees are taken care of, with experts handling employee benefits, training, retirement plans, and payroll services.

2. Avoid CRA Penalties

According to the IRS, 40 percent of small businesses pay an average penalty of $845 per year for late or incorrect filings and payments. And the findings are similar in Canada. There are so many deadlines, classifications, and deductions, knowing all of them seems impossible. This leaves your business at risk of losing money due to improperly filed taxes. Perhaps even worse, your business could find itself at risk of an audit.

Canadian payroll providers are there to protect you, ensuring you and your business aren’t left at risk of Canadian Revenue Agency (CRA) penalties.

3. Increase Security

Payroll management is intricate and sometimes risky business. Even with the most trusted staff, there’s always the risk of identity theft, embezzlement of company income, or tampering with files for personal gain. In fact, Forbes estimates that approximately 4 million fraudulent insurance accounts are opened every year using stolen personal information. The risk is high. On the other hand, leaving sensitive data on a company server can leave your business vulnerable to cyber-attacks or crashes. How safe is your server?

Working with Canadian payroll providers leaves your payroll services in trusted hands. With state-of-the-art systems for storing and protecting data, you can rest easy knowing your business and employee information is protected.

4. Refocuses Time

Your business has needs and it’s up to you to handle them. The last thing you want is time taken out of your day to handle both the simple and complicated aspects of payroll. There aren’t enough hours in a day to manage your business, while also managing payroll and HR duties.

There are many signs it’s time to outsource payroll, but finding yourself spending more than enough time on the task is often the biggest tell. Working with Canadian payroll providers keeps your employees paid, and your energy focused on more important business functions. With more time on your hands, growing your business and working towards your goals can become your focus.

5. Peace of Mind

Running a business is stressful. However, research has shown that carrying stress can have negative impacts on many aspects of your health, from your physical well-being to your love life. Working with too much stress can put both you and your business in a dangerous situation.

Give yourself a break and consider outsourcing payroll. Working with Canadian payroll providers ensures nothing with your business is left to chance, letting you relax and your business run with ease.

What US Companies Need to Know about Paying Employees in Canada

Topics: Payroll Processing

How Payroll Taxes Are Calculated

Posted by Corinne Camara

|

Jul 26, 2017 9:00:00 AM

How Payroll Taxes Are Calculated--.jpgPayroll is an essential business process that has strict provisions and guidelines. Managing payroll can be quite stressful on its own, but when combined with other HR-related administrative tasks, it becomes even more precarious to undertake payroll in-house.

Download our free guide on what US companies need to know about paying  employees in Canada.

By outsourcing payroll duties to a payroll service provider, companies gain the ability to leverage HR, legal, and compliance expertise for any complex workforce challenge that may arise.

Payroll Is Complicated, So Outsource It!

Payroll operates somewhat differently in Canada. Here, the Canada Revenue Agency (CRA) exists to protect the rights of employees and to make sure that businesses comply with federal and provincial regulations.

Although the various types of payroll taxes depend on the province or territory the business operates in, employers are required to report and remit:

  • Income tax;
  • Canada Pension Plan (CPP) contributions; and
  • Employed Insurance (EI) premiums.

Failure to comply with Canadian payroll requirements can result in fines of $1,000 to $25,000, imprisonment for up to 12 months, or a combination of both. The CRA outlines the details for certain offenses and omissions, from failing to make the appropriate payroll deductions to filing information forms late.

Businesses have at their disposal the CRA’s Payroll Deductions Online Calculator (PDOC) or any other online payroll calculator to help determine the number of deductions required for your employees.

Deducting Income Tax

Employers are responsible for deducting income tax from the remuneration or other income they pay. The amount withheld depends on the provincial or territorial tax rates where the employee reports to work.

The easiest way to calculate how much you, as the employer owns, is to use the CRA’s PDOC. If this is still overwhelming, any payroll service would be happy to help your business accurately calculate your required payroll tax deductions.

Deducting Canada Pension Plan (CPP) Contributions

CPP deductions are a bit more complicated in that the employee must meet the following conditions:

  • is in pensionable employment during the year; and
  • is not considered to be disabled under the CPP or the Quebec Pension Plan (QPP); and
  • is 18 to 70 years old even if the employee is receiving a CPP or QPP retirement pension.

Additionally, these deductions are particularly complicated in terms of maximum pensionable earnings and annual basic exemption. Moreover, if the business operates in Quebec, a QPP is deducted instead of CPP and this must be taken into account if an employee is moved from Quebec to another province or territory.

This seems stressful, however, as with other payroll taxes, the CRA’s PDOC or a payroll service can help businesses make sure the correct amounts are paid out.

Deducting Employment Insurance (EI) Premiums

Businesses must deduct EI premiums from an employee's insurable earnings if that employee is in insurable employment during the year. In addition, employers must pay 1.4 times the amount of the employee's premiums.

It is worth noting that EI provisions cover most employment in Canada and bear no age limit restriction. Furthermore, when employee EI deductions reach the yearly maximum amount, employers stop deducting them. On top of that, some benefits and payments you give to employees can be exempt from EI altogether.

The CRA sets annual EI premium rates and maximums which determine the EI deductions for a given year. In addition, there is a separate chart for Quebec, which has a different rate structure.

Overwhelmed yet? Again, the CRA’s PDOC or a payroll service can help streamline this payroll taxation process.

Outsourcing Payroll Can Give You Peace of Mind

Managing payroll and navigating Canadian taxes on your own can be extremely stressful and time-consuming. To alleviate this burden, many businesses choose to outsource their payroll to a payroll service provider.

Ultimately, payroll services give businesses peace of mind and exist to ensure that your workforce is always paid promptly, accurately, and in full compliance with all federal and provincial regulations.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

5 Ways Small Business Payroll Services Can Help Your Business Grow

Posted by Shannon Dowdall

|

Jul 24, 2017 9:00:00 AM

5 Ways Small Business Payroll Services Can Help Your Business Grow--.jpgIn a small business, employees often wear many hats and perform various duties. Payroll stands out as perhaps the most important task of all, one that affects the whole company, and it is something that you never want to neglect nor potentially mess up.

By outsourcing payroll and any number of small business payroll services, businesses not only reduce costs and risks, but they are able to better focus on their growth and success of their business.

Download our free guide on what US companies need to know about paying  employees in Canada.

Here are five ways small business payroll services can help your business grow:

1. Focus/Refocus on Your Business

Payroll is one aspect of a business that owners should consider outsourcing. With less time spent on payroll, more resources can be more efficiently allocated to focus on their core business. As they often say in business, “time is money”, and payroll is often one of the biggest sinks of internal manpower and time in a business.

Especially for small business owners, the ever-changing job market can have an effect profits. New provincial hiring requirements may crop up or compensation regulations may change without notice. These sort of last minute disruptions can throw a wrench into otherwise regularly scheduled payroll operations and increase the risk of error and the probability of mistakes.

However, outsourcing payroll to a small business payroll service drastically mitigates these dangers. This allows small business to focus on their core product and their growth.

2. Cost and Risk Analysis

For small businesses, payroll is often something that owners like to tackle themselves. This do-it-yourself method, while seemingly cost effective, may work well initially, but is not sustainable nor does it facilitate future growth of the business itself.

Do you know if employee benefits are taxable or non-taxable? Are you up to date on the recent hiring and wage laws? Managing payroll is an all-encompassing and time-consuming task that is perhaps best left to any number of small business payroll services.

3. Expertise and Accountability

The nature of payroll requires the employer to navigate complicated provincial and federal legal obligations and this is something that businesses should never leave to chance. By using a small business payroll service, businesses have the added benefit of experts who are up-to-date on the latest tax laws and compliant to any payroll-related regulations.

Payroll services have the know-how and resources to complete payroll tasks accurately and efficiently. Companies can count on a small business payroll service to meet filing deadlines, navigate legal jargon, and make timely and accurate deposits. Never risk legal issues again!

4. Employee Satisfaction

Payroll is something that affects everyone in a business. Having an open dialogue with employees is something that can only improve the quality of the workplace and drive productivity. A small business payroll service removes the enormous responsibility of payroll from the day-to-day business equation. In doing so, employees can direct inquiries and any potential issues with a third party, reducing the chance of any in-office politics.

Employees also expect up-to-date technology to have convenient access to their payroll information. If employers are unable to adapt and provide options such as direct deposit or self-service, they may be at a severe disadvantage. Small business payroll services cover these kinds of mobile payroll technologies and are at your disposal to keep your business up-to-date.

5. Peace of Mind

For a small business, payroll services are an efficient and sustainable way to ease the level of stress in the day-to-day management of your business. By leaving the number-crunching to professionals, employers can invest more in their brand, in their employees, and, ultimately, their growth. At the end of the day, small business payroll services offer peace of mind and the knowledge that experts have these often-overwhelming tasks under control.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing

Why Payroll Efficiency Is Crucial for Any Company

Posted by Karen McMullen

|

Jul 19, 2017 9:00:00 AM

Why Payroll Efficiency Is Crucial for Any Company.jpgPayroll is a core corporate process that is often enormously stressful and time-consuming. Yet, it is important for companies to consider streamlining payroll processes in order to increase business efficiency.

In this regard, a payroll service provider may be exactly what your business needs. Professional Employer Organizations (PEOs) exist to give businesses peace of mind and to ensure that your workforce is always paid promptly, accurately, and in full compliance with all federal and provincial regulations.

Download our free guide on what US companies need to know about paying  employees in Canada.

Payroll Affects All Employees

Not only is payroll an essential business function, it is also a key player in maintaining employee happiness and satisfaction.

At all levels within a company, employees depend on getting paid promptly, accurately, and consistently. Payroll processing that is slow, ineffective, or prone to errors can result in an awkward relationship between upper management and workers. Moreover, this kind of discord unnecessarily taxes the time of those in charge of payroll and HR.

Employees play a vital role in any company and by having accessible and clear payroll policies, employers can ensure their happiness and dedication to their work. Without an efficient payroll, many payroll issues, such as underpaid taxes or employee misclassifications, may arise.

Understanding Tax Policies Is Important

The Canada Revenue Agency (CRA) protects the rights of employees and makes sure that businesses comply with federal and provincial regulations. With that said, a company’s payroll efficiency is largely dictated by how well they can deal with the CRA.

Although payroll tax policies depend on the province or territory of the business, employers are generally responsible for:

  • Remittance;
  • Payroll deductions;
  • Bonuses;
  • Canada Pension Plan (CPP) contributions; and
  • Employed Insurance (EI) premiums.

Successful businesses make payroll efficiency a top operational priority and HR expertise in this area is a critical element of that success. To this end, if businesses are struggling to streamline payroll functions, they would be wise to simply seek professional help.

Outsourcing Payroll Can Cut Costs and Boost Productivity

In-house payroll can be a mixed bag of balancing policies, organizing employees, and managing new technologies, but this is where a PEO can help! PEOs provide HR services to businesses and cover everything from payroll, benefits, and taxes to assisting with provincial and federal laws and regulations.

A PEO can organize everything for your business and streamline payroll-related services that frequently take up so much time and manpower. PEOs can save businesses money by lowering costs and better managing risks. Additionally, PEOs are on top of the latest technologies, IT systems, and any changes in government regulations that can affect your business.

Sometimes there are never enough working hours in a day, but a PEO can help recoup some of that time by overseeing a large majority of the employment-related administrative work. By reducing the need for internal HR staff, PEOs can save businesses time and labour, allowing them to ultimately focus internal resources more efficiently.

Businesses must recognize that outsourcing these duties is often the smarter, more cost-efficient option. The cost of getting something wrong is high, but PEOs are experts on employment-related compliance and will make sure it’s done right. Although it can be scary for companies to give control to a third party, payroll specialists can make sure that everything is done in accordance with CRA regulations.

Focus on Your Core Business

Ultimately, an efficient payroll results in a more productive and proficient workforce. PEOs, such as the Payroll Edge, make managing a business that much easier by worrying about the daunting task of understanding employment compliance, payroll management, and HR administration so you don’t have to.

Payroll services give businesses peace of mind and enable them to optimize their operational scope and ensure that the company is focused on its success.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing

5 Tips for How to Manage Payroll Effectively

Posted by Stacey Duggan

|

Jul 14, 2017 9:00:00 AM

5 Tips for How to Manage Payroll Effectively.jpgManaging payroll can be confusing to say the least. If you’re not sure how to manage payroll effectively, you’re not alone. Many companies don’t know the best ways to execute their payroll processes, which can be problematic in the future. If you’re looking to maximize the efficiency of your HR department, here’s five tips on how to manage payroll effectively.

Download our free guide on what US companies need to know about paying  employees in Canada.

1. Stay Organized

Organization is absolutely essential when you’re looking to maximize your payroll efficiency. When your payroll processing documentation is arranged in an orderly fashion, it makes your task easier and less time consuming.

Your business also needs to be organized when it comes to how to manage payroll effectively to avoid missing important dates. Never miss a deadline again by setting up a payroll calendar. This will give you a visual reminder of when tasks need to be completed before important dates. You’ll be able to manage your time more effectively, and won’t be stressing out over your payroll duties last minute.

2. Get Technical with the Right Software

Technology has made payroll processing easier than ever. For those that don’t know how to manage payroll effectively, the answer you’re looking for can be found in the right software.

There are many different kinds of software that your company could use. Payroll tax deduction calculators can help you determine how much you’ll need to deduct for your staff including federal tax withholding, provincial tax withholding, employment insurance, and Canadian Pension Plan.

Other additional payroll software, like PayDayTrak, can help you:

  1. manage clients and employees;
  2. add additional expenses or changes to an employee’s pay;
  3. track time off;
  4. easily download reports;
  5. access previous employee documents, such as paystubs, cheque history, ROE’s and T4’s; and
  6. access all payroll invoices.

3. Stay on Top of Relevant Payroll Rules and Regulations

Legislation surrounding payroll is always changing. In order to avoid any potential lawsuits, you need to be up-to-date on all relevant payroll rules and regulations. There’s no excuse for a company managing their own payroll to not know how to comply with government regulations. This will also help you when tax season rolls around so that you don’t get audited.

To help companies better understand the rules and regulations surrounding payroll compliance in Canada, the Canadian Payroll Association released a variety of Payroll Best Practices Guidelines.

4. Keep it Simple Yet Effective

There’s no need to overcomplicate your payroll. Simplifying your payroll process can help keep things running smoothly, with less effort from you and your HR department.

As an example, switching from cheques to direct deposit is a great way to simplify your payroll process. Instead of having to keep track of all the cheques you’ve handed out, you can keep a simpler electronic documentation of your bank transfers which will make your payroll process easier in both the short and long term.

5. Don’t Stress, Outsource Payroll Services

We get it, managing your own payroll can be seriously stressful. The last thing you need to add on top of your already busy schedule is payroll and HR administrative tasks. That’s why many businesses choose to outsource their payroll—but you’ll need to find the right one.

Payroll service providers know not only how to manage payroll effectively, but can give you peace of mind knowing that everything is completed with the utmost diligence and knowledgeable expertise.

Outsourcing payroll services is especially beneficial if your business is located outside of Canada, but are still looking for Canadian employees. An employer of record can help you effectively navigate the Canadian judicial system free from error, saving you precious time and money.

Why wait? Get in contact with a payroll provider and employer of record today!

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

Outsource Payroll to Avoid Audit

Posted by Ray Gonder

|

Jul 12, 2017 9:00:00 AM

Outsource Payroll to Avoid Audit.jpg

The dreaded word for Canadian businesses, audit. While audits may seem like a hassle and an inconvenience, they’re an essential component in ensuring proper tax filing among Canadian companies.

Download our free guide on what US companies need to know about paying  employees in Canada.

The reality is that while many Canadian businesses are honest about their tax dealings, some bend over backwards to avoid paying taxes. We’ve all heard of offshore accounts protecting millions of taxable Canadian dollars, but there are many more tax schemes that people use to try and cheat the system.

In light of these recent scams, the Canadian Revenue Agency (CRA) has cracked down on Canadian businesses. Last year, the CRA recovered $1.6 billion on audits of abusive tax planning. In addition, in the 2013-2014 fiscal year, just under 40,000 small businesses were audited. Unfortunately, this means that for honest businesses, like yourself, you may be at an increased risk for being audited—but not if you outsource payroll.

Why is Your Business Being Audited?

It’s essential for your business to stay on the CRA’s good side. Avoiding common red flags can help protect your business from the looming prospect of a government audit. The likelihood of your business being audited may be impacted by the following circumstances,

  1. Mismatched information. The CRA relies heavily on what is standard for your business. They have a variety of different reports which outline the general profit margins and incomes for your specific type of business. If your company is making well above or below average, this can be cause for alarm. If there are any discrepancies among your different filings, the CRA will be quick to take action.
  2. Large deductible expenses. Again, the CRA knows what is the normal deductible amount for your business. The CRA is especially suspicious if you are making large charitable donations, and may want to prove their validity.
  3. Significant shareholder changes. This includes loans and large debit balances which may seem suspicious to the CRA.
  4. Cash-heavy business dealings. The CRA is skeptical of businesses that deal primarily in cash transactions. This can include restaurants, personal services, bars, or retail stores. The CRA wants to avoid companies not declaring their cash because there is no paper trail.
  5. Recurring losses. Sometimes losses are to be expected, but if your company is continuously losing money, the CRA wonders how and why your business can stay afloat, which may be a red flag for illegal tax evasion.

The Audit Process

Based on the information you submit to the CRA, you may be flagged for an audit. Unfortunately, the auditing process can take a significant amount of time.

The auditor will first review your initial information and may require additional supplementary documents and records. Everything from invoices and cancelled cheques to tax calculations and accounting programs will be required for review.

If the auditor identifies any problems, you will need to work with them to prove why you’ve filed your taxes in such a way. You need to be able to justify your claims with sound proof and reason.

At the end of the audit, you may be required to pay an outstanding balance if there were any discrepancies in your tax filings. If the auditor is unable to find anything wrong, you do not owe any additional money to the CRA.

Benefits of Outsourcing Payroll       

The best way to avoid even the slightest chance of your business being audited is to outsource payroll. A payroll services provider will help to guarantee government compliance, while ensuring that all your HR administrative tasks are completed in a timely and efficient manner.

As a business owner, the decisions you make every day are based on risk versus reward. There is no risk for you to outsource payroll, but the reward is plentiful. You not only avoid the risk of being audited, but will also have access to the most organized and well-informed HR and payroll department your company has ever experienced.

What US Companies Need to Know about Paying Employees in Canada

Topics: Payroll Processing

Top 5 Canadian Payroll Mistakes You Can’t Afford to Make

Posted by Karen McMullen

|

Jul 3, 2017 9:00:00 AM

Top 5 Canadian Payroll Mistakes Your Can’t Afford to Make--.jpgAs your business continues to grow, you may look to international marketplaces to help you generate additional revenue and continue expansion. If you’ve chosen Canada as your next project location, you’ll need to be aware of current regulations surrounding payroll practices.

If you’re not 100 percent comfortable managing your HR and payroll department, this could leave opportunity for error. Don’t make any of these five Canadian payroll mistakes—educate yourself so can continue to conduct business in Canada without any problems.

1. Misclassification  

Do you know the difference between an independent contractor and an employee? If not, you’ll want to find out immediately. If you don’t know the difference between the two and you’re classifying your employees as independent contractors, this could mean serious problems for your business.

Misclassification has become a real problem in Canada in recent years, as some companies try to get around the system by classifying their employees as independent contractors. This means that they don’t have to pay into Employment Insurance, and other employment taxes mandatory by the Canadian Revenue Agency.

If a company misclassifies their employees, there can be grave repercussions.  

Download our free guide on what US companies need to know about paying  employees in Canada.

2. Miscalculation

If you’re offering your employees benefits, it’s important to know which ones are taxable. If you fail to properly source deduction remittances as per schedule, your employee could be held responsible. This could impact your employee’s personal income tax return and make them liable per the Canadian Revenue Agency (CRA).

Your business could also be held accountable for non-compliance which could lead to your company being audited.  To avoid this, make sure you know the actual value of the benefits you are offering—this includes related taxes as well.

Additionally, problems can arise if you miscalculate the taxes on employment income. Did you know that employer-paid living and personal expenses are taxable employment income? Same with gifts, awards, and bonuses? If you’ve been miscalculating these taxes incorrectly, it may be time to look to outside help to assist you in your payroll duties to avoid any other Canadian payroll mistakes.

3. Missing Deadlines

If you miss a government mandated deadline, this could mean major fines for your business. Whether you’re deducting, remitting, or reporting, if you miss the deadline you could be prosecuted anywhere between $1,000 to $25,000.

To avoid missing any important deadlines, your payroll department should implement a payroll schedule. This can help you keep track of important dates relating to all your time-sensitive payroll needs.  

4. Compliance

Meeting all current Canadian laws pertaining to payroll and HR administration is absolutely necessary when conducting business in Canada. Payroll compliance goes far beyond wages and extends from insurance to layoffs and everything in between. It is essential to abide by all Canadian laws if you are hiring employees in Canada or you could face the repercussions. This is one Canadian payroll mistake you definitely don’t want to make!

5. Failing to Outsource Payroll and HR Duties

All the aforementioned Canadian payroll mistakes can be avoided by hiring a Canadian employer of record (EOR). Trusting your payroll and HR administration to a trusted, reliable, and reputable EOR ensures your business will be carried out seamlessly in Canada.

Keeping up with current Canadian regulations is difficult. It will take you a lot of time and energy to get all caught up to standard. Let an employer of record work on your behalf so that you can focus on your core business and not have to trouble yourself with any payroll-related tasks.

Partnering with an employer of record will also save your business from making any avoidable Canadian payroll mistakes. These mistakes will have to be amended and could be costly. Save yourself time and money and find an employer of record for your Canadian business dealings.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

How to Handle Canadian Payroll Taxes for a US Company

Posted by Stacey Duggan

|

Jun 30, 2017 9:00:00 AM

How to Handle Canadian Payroll Taxes for a US Company--.jpgPayroll taxes are complex and require a trained eye for accurate compliance. For American companies entering new territories in Canada, Canadian payroll taxes for a US company feel even more complicated than calculating taxes at home base.

There’s plenty of key points to take away that reduce the burden of calculating Canadian payroll taxes. Here’s how US companies can handle them.

Meet Deadlines

Canadian payroll taxes have to be submitted to government agencies and regulatory bodies by a specified date. This date varies depending on the type of business and its annual revenue.  The Canada Revenue Agency (CRA) is the federal government agency that sets these deadlines. They promote Canadian tax regulations for person and business, along with filings, forms, and all other related issues. They’re in charge of guidelines regarding business and personal tax.

Download our free guide on what US companies need to know about paying  employees in Canada.

Deadlines can change, so US employers need to stay vigilant to ensure timely submission, and avoid fines, audits, and other issues that could occur with late filing. Filing remittance reports falls to the responsibility of the employer only, meaning it’s crucial that American businesses are punctual with reports.

Ensure Correct Classification

US companies need to define their Canadian employees correctly to ensure they’re paying the correct Canadian payroll taxes for US company. Independent contractors and full-time employees do not have the same withholding rates, and tax deduction mistakes could result in back tax payments to reimburse the employee.

In addition, US employers will find themselves in the CRA’s sight, and could face fines and penalties for misclassification. While some American businesses opt to label all employees as independent, this method is rarely correct, and results in further consequences–easily avoidable with correct classification. Talk to the in-house payroll department or the CRA for a clear understanding about labels to ensure taxes are properly deducted.

Know the Applicable Taxes

US companies need to know which taxes apply and which amounts are deducted according to the necessary federal and provincial laws. Canadian employees have source deductions removed from each period: Canada Pension Plan (CPP), Employment Insurance (EI), and income tax.

CPP funds the retirement income system, which all Canadians 18 and over are required to contribute to. EI is a benefit to employees who lose their job, outlining receivable amounts as based on previous salaries, hours worked, the jurisdiction’s unemployment rate, and other factors. Income tax is a mandatory federal deduction as based on the taxable income of individual Canadian citizens.

US companies need to ensure thorough understanding of these three players when calculating Canadian payroll taxes.

Understand How to Calculate Withholdings

Canadian employee wages are subject to Canadian tax withholdings. Withholdings are calculated based on employee income, and are affected by other non-salary monies, such as tips or bonuses, before deduction. Withholdings, or deductions, are done every pay period, and calculated from both the employee’s pay statement, as based on the individual income and tax class, and the employer’s business itself.

Both EI and CPP are subject to yearly and pay period maximums. It’s up to the employer to track contributions to ensure the right amount is withheld. Any excessive amounts withheld have to be refunded to the employee.

Outsource to the Pros

A great alternative to DIY is to outsource Canadian payroll taxes for US company. Partnering with an employer of record provides knowledgeable experts who know tax codes and remittance deadlines inside and out, ensuring US businesses stay on time and are compliant with Canadian payroll regulations.

Acting as the employer for Canadian workers, they’ll manage tax withholding so American businesses can relax knowing their company meets the right tax codes. This kind of partnership provides peace of mind that the job is done correctly and free of error.

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

Topics: Payroll Processing

7 Ways to Achieve Better Payroll Efficiency

Posted by Karen McMullen

|

Jun 21, 2017 9:00:00 AM

7 Ways to Achieve Better Payroll Efficiency--.jpgBusiness owners have a lot on their plate. They’re managing employees and tracking business goals, all while handling any curve balls that come their way. Owners want to spend as much time as possible on their principle tasks, and dedicate the smallest amount of time to their administrative duties. This has never been more evident than in the payroll department, which is known to be notoriously tedious and time-consuming.

There are solutions. Below are 7 ways businesses can improve payroll efficiency.

Download our free guide on what US companies need to know about paying  employees in Canada.

1. Get Your Employees Involved

Staff can offer valuable opinions and new ideas to improve payroll efficiency. Communication with employees pinpoints areas of confusion to specifically outline where improvement is needed. Ask for feedback, weak spots, and areas that are working. Consider training employees in different aspects of payroll and administering minor responsibilities that are easy to do, and ease the burden on the payroll department.

Payroll directly effects everybody in the company. When the whole team has a say in the process, it’s easier to know how to enhance payroll efficiency.

2. Software

Payroll software works wonders by automating the repetitive tasks so it’s easier to calculate wages. A software platform means less time spent on manual data entry, and less chance of error from hand calculations. Businesses can even use the payroll software concurrently used with other relevant office programs and integrate a less complicated technological solution. Adding payroll technology eases the process of entering hours, benefits, tax deductions, and other matters in this department.

3. Hire A Payroll Clerk

Employ an in-house bookkeeper trained to handle any emergencies, questions, and other issues that arise. Duties in that department won’t have to be divided among staff with a payroll clerk managing it. Companies’ payroll efficiency increases with a knowledgeable expert who understands compliance, calculations, deductions, and anything else thrown their way.

4. Simple Policies

Miscommunication happens easily with hard-to-read policies. When the rules regarding submitting timesheets, expenses, and claiming vacation pay aren’t clearly outlined, more time will be spent cleaning up errors that could’ve been avoided in the first place. Transparent, easy to understand policies won’t have staff confused about how their pay is determined.

Don’t assume all employees know the ins and outs of payroll. A straightforward policy outlining responsibilities for pay, vacation earnings, classification, and the process itself, will have everyone on the same page.

5. Classification

If employees are misclassified, the wrong taxes are deducted, the wrong salaries paid, and the incorrect benefits or expenses are distributed. Employers will then be stuck fixing these errors and readjusting salaries.

On top of these problems in-house, it causes problems with the Canada Revenue Agency (CRA). The CRA doesn’t take worker classification lightly, and errors here result in fines and penalties. Business owners do not want to be responsible for back wages, so ensure employees are labeled correctly at the start.

6. Know the Rules

Payroll compliance is complex and includes a lot of information, which needs to be clearly and fully understood to distribute wages and deduct taxes correctly. On top of comprehending legislation, business owners need to be aware of its amendments, alterations, and new ones created. It’s vital to keep up with to ensure it’s handled properly.

Noncompliance is an even bigger headache. While it’s a pain and time-consuming, it’s worth it for payroll efficiency. The CRA is strict about following government regulations. Employers need to be aware of all their obligations to ensure compliance.

7. Outsource

There’s no need to struggle through it alone with trained professionals willing and available to handle this process for you. Outsourcing to a payroll provider provides business’ relief and eases the burden of payroll duties as related to compliance, regulatory agencies, and other aspects. Outsourcing provides peace of mind for companies knowing experts have this department under control.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing

How to Make Sure Your Payroll Outsourcing is Successful

Posted by Karen McMullen

|

Jun 14, 2017 9:00:00 AM

How to Make Sure Your Payroll Outsourcing is Successful---1.jpgEspecially for businesses employing citizens of other countries, outsource payroll processing and hr management is a smart idea. By outsourcing this tricky task, you are ensuring that your company is complying with all foreign payroll tax rates and other regulations. Follow these tips to make sure that your outsourced HR and payroll service is running smoothly.

Communicate Frequently

Be sure to stay in contact with your payroll provider on a regular basis. This will ensure that you are both informed on any changes or mistakes that need to be addressed. By establishing a professional relationship early on, you are holding each other accountable to best practices.

Hire An In-House Expert

Designate an employee in your local office to be the point person on outsource payroll processing and HR management. This employee will be in charge of understanding all regulations and laws for managing international employees.

Know Labour Laws

When employing people in other countries, be sure to understand their local labor laws. You will need to follow different standards than you do for your local employees. Check in with your outsourced HR specialists, as well as the employees themselves, to make sure that you are complying.

Keep Employees Informed

When expanding your business into another country, be sure to keep your in-house employees in the know. These changes may or not affect them, but this open communication and transparency is part of best management practices regardless. For your international employees, get to know them and inform them that you are outsourcing their payroll.

Ask Questions

Hiring internationally can be complicated, so don't be afraid to ask your payroll and HR company plenty of questions. They are the professionals, so they will have the answers to clear up your doubts.

Don’t Risk It

By following the above tips, you can make sure that your outsourced payroll is running efficiently and without oversight. If any problems do arise, be sure to communicate with the payroll and HR company immediately. They are there to assist you and ensure that all issues are resolved.

Many U.S. companies hesitate to expand into Canada because of the different rules and jurisdictions between the two countries. Here at The Payroll Edge, we are available to assist you with hiring and paying your Canadian employees. Contact us today to learn how we can work with you. 

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing

Subscribe to Email Updates

Recent Posts

Posts by Topic

see all