Home Blog

Blog

Employer of Record Service: Your American Business Presence in Canada

Posted by Ray Gonder

|

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

Why a Canadian Payroll Calculator Can Be Your Best Friend

Posted by Stacey Duggan

|

Jan 28, 2014 10:25:00 AM

describe the imageWhen trying to navigate the complexities of Canadian payroll laws, it’s good to have a friend on your side. A Canadian payroll calculator can be that friend. For US-based businesses, Canadian laws can be especially cumbersome and difficult to overcome. Like a good friend, a Canadian payroll calculator can offer advice, guidance, and encouragement. That advice and guidance can keep you from making costly mistakes, while encouragement can keep you going even when complying with the laws seems impossible. There are a lot of tools you can use to ease your Canadian expansion, a Canadian payroll calculator is one that will make it feel like you have a trusted friend in your corner.

Advice When You Need It

Sometimes, you just need to know if you’re on the right track. A Canadian payroll calculator can help you determine if your withholding calculations are near the mark. By entering some basic employee information, you can get an overview of the most typical tax situations in different provinces. While it can’t give you information on every possible scenario, a Canadian payroll calculator can give you a good starting point for the most common tax situations. Best of all, like a trusted friend, a payroll calculator is available whenever you need it. You don’t have to wait for business hours, or make an appointment—just open the calculator and start getting help.

An Ounce of Prevention

Like a good friend, a Canadian payroll calculator can help keep you from becoming your own worst enemy. If the advice it gives varies wildly from your own calculations, then you should double-check your numbers. It’s possible that you’re entering erroneous information, or misinterpreting some aspect of the law. If you ignore the advice and stick to your own numbers, you may be opening yourself up for future legal consequences. While the calculator won’t be right in every instance, broad discrepancies should be thoroughly investigated. If you can’t decide between your numbers, and the numbers the calculator gives you, then it’s time to consult a professional.

In Over Your Head

A good friend will tell you when it’s time to talk to an expert. If a Canadian payroll calculator is consistently showing that your numbers are off, that’s an indication that it’s time to get professional help. There are a lot of complexities to Canadian payroll law, and it’s possible that you’re missing something important. The calculator has no way of knowing if it’s a worker classification problem, a job-site location issue, or a simple arithmetical error. All it can do is take the information you give it, and provide its best guess based on the most common regulations. For anything beyond that, you need to talk to a payroll professional.

In this Case, Good Friends are Easy to Find

Fortunately, it’s easy to find other trusted friends for your corner. A professional payroll service, like The Payroll Edge, can handle all of your Canadian payroll needs for you. They have a highly-trained, highly-experienced staff of payroll professionals. With their help, you’ll speed up your payroll process, while also minimizing the chances of an audit or penalties. Using a professional payroll service takes all of the guesswork out of handling your payroll, while also freeing up your staff to handle other tasks. While a Canadian payroll calculator can help you do it yourself, a payroll service provider can do it for you.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Service Provider, Canadian Payroll, Canadian Payroll Service, Best Payroll Calculator, Payroll Calculator, CRA, Canadian Payroll Calculator, Payroll Tax Laws in Canada, Full Service Payroll Provider

How U.S. Companies Manage Their Payroll in Canada

Posted by Stacey Duggan

|

Dec 13, 2013 9:00:00 AM

How US Companies Manage Their Payroll in CanadaFor US-based businesses, managing payroll in Canada presents a unique set of challenges. To legally hire and pay Canadian employees, there are numerous obstacles that must first be overcome. The cultural similarities between the US and Canada can give the impression that managing payroll in Canada isn’t that different from managing payroll in the US. Unfortunately, nothing could be farther from the truth. Canadian payroll regulations are wholly different from US regulations. From the ground up, managing payroll in Canada is a completely different animal. US-based businesses that aren’t fully aware of these differences at the outset are sure to make costly mistakes along the way.

A Solo Act

A lot of US businesses choose to try and manage their Canadian payroll needs by themselves. They believe that using their existing HR staff and payroll system will save them money in the long run. Once they get into it, they often realize that their existing payroll management simply can’t be adapted to manage their payroll in Canada. The vast differences between the Canadian and US systems make it nearly impossible to use the same personnel and processes to handle payroll in both countries. This makes it necessary for the US-based business to set up two entirely separate payroll departments. In effect, trying to save money will immediately double the cost of managing payroll.

Setting up a separate payroll system is just the first of many obstacles that the business will face. Before hiring their first Canadian employee, they must also register a business presence inside of Canada, set up accounts with Canadian regulatory authorities and agencies, establish banking and insurance infrastructure, and make sure their business complies with all federal and provincial statutes. Once all of those steps are completed, they can then begin going through all of the steps to hire and retain employees. At a minimum, those steps will require verification and classification of employees, managing withholdings and remittances, ensuring compliance with workplace safety and training requirements, and keeping up with the frequently changing payroll regulations. Before a business issues its first paycheque, it will invest hundreds of work-hours into just making sure that the cheques will be legal and legitimate.

In it Together

For US businesses that don’t have the time to essentially start a new company across the border, there are companies that provide Canadian Employer of Record (EOR) services. These are the northern cousins of professional employer organizations (PEO). They not only take over the management of payroll but mitigate the risk of hiring someone in an unknown country by taking responsibility of all government compliance.  With an EOR in Canada, a U.S. company does not have to maintain a business presence north of the border or keep up to date with the many rules and regulations that change from Province to Province.

There are other significant advantages to retaining the services of an EOR.

A Canadian EOR helps maximize efficiency while minimizing risk. They have the training and tools to deal with the most convoluted aspects of payroll and human resources in Canada. This helps them quickly and accurately handle all of your payroll needs, from worker classification to taxation remittances. An EOR will also have an existing infrastructure for banking and insurance, along with all of the necessary government accounts. And when it comes to the variety of issues that can arise when hiring a worker, an EOR will take care of them as well from employment agreements, harassment claims, employee discipline and termination all within the compounds of Canadian law.

If you’re looking for a less risky, more efficient way to expand into Canada, an EOR is for you.

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

Topics: Payroll Service Provider, Canadian Payroll Deductions, Canadian Payroll Regulations, EOR, PEO, Professional Employer Organizations, Employer of Record, U.S. Companies operating in Canada, Payroll Tax Laws in Canada

5 Ways Using a Payroll Service Makes Sense

Posted by Stacey Duggan

|

Nov 6, 2013 9:00:00 AM

5 Ways Using a Payroll Service Makes SenseMany small business owners start out handling payroll on their own. As their company grows, it becomes increasingly difficult and time consuming to keep up with payroll. By that time, the company usually has some kind of HR manager or administrator, and they often inherit the payroll responsibilities. They become a default payroll manager, regardless of whether they have the training and experience to handle the needs of a growing company. This takes away from their HR responsibilities, and puts your payroll in the hands of someone who may not be able to dedicate the necessary time to do it right.

Instead of handing off your payroll needs from one employee to the next, it makes more sense to hire a payroll service. Payroll providers have the training, experience, and knowledge to handle the payroll needs of any size company. A payroll provider lets you and your staff stay focused on the business at hand, while your payroll needs receive the attention they deserve. Here are five ways that hiring a payroll service makes sense for your company:

Counting the Minutes

Every minute you spend on payroll is a minute that’s not focused on your core business activities. As the hours add up, and you answer employee queries, and read up on the latest legislative changes, more productive pursuits are being delayed.

A payroll service deals with payroll needs every single day. They don’t have other responsibilities that consume their attention. They can handle your payroll needs quickly, efficiently, and accurately. You will be able to spend more of their time focused on growing your business.

Time is Money

By saving you time, a payroll service saves you money. They also save you money by ensuring that your payroll is handled right the first time. Mistakes in payroll can be expensive. Cutting new cheques, making back payments, and government fines can quickly add up. The easiest way to avoid all of these potential expenses is by using a payroll service provider.

Focus on Service

When someone in your company handles payroll, they can’t always give immediate attention to questions or concerns. If you have a problem, you either have to interrupt the payroll manager, or wait for them to get back to you.

With a payroll service, they’re always working on payroll. When you call with questions or concerns, that’s just another part of what they do every day. Since they handle customer queries all the time, they can have the right answer for you right away. 

Get it Right

A lot of payroll mistakes can be traced to ignorance of changing legislation. Even when the legislation doesn’t change, it can be incredibly complex. Your payroll manager may not have the time to research all of the intricacies of the law, let alone keep up with the constant changes.

A payroll service understands the laws, as well as their application. They often participate in crafting new laws, so they have a deep understanding of the issues. Keeping up with changes is part of their day-to-day routine. This makes it easy for them to avoid mistakes that can lead to fines and back payments.

Expert Guidance

As your business grows and changes, you’ll need advice on future payroll issues. It’s unlikely that your payroll manager will have the experience to help guide that growth.

A payroll service handles clients of all sizes and stages of growth. This gives them unique insights into the challenges faced by businesses. This insight can prove invaluable in helping you steer your company into the future.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Service Provider, Outsourced Payroll Service, Best Payroll Calculator, Payroll Deductions, Dependable Payroll Service, Payroll Tax Laws in Canada, Great Payroll Service Provider, Small Business Operations, Small Business Payroll

What Are Payroll Taxes in Canada?

Posted by Ray Gonder

|

Aug 1, 2013 9:00:00 AM

Payroll Taxes in CanadaWithout an understanding of payroll tax laws in Canada, you'll have a hard time operating your business. Payroll taxes are one of the most fundamental aspects of legally employing people in Canada. As soon as you hire people to work for you, you have responsibilities to pay them properly, and that includes paying payroll taxes.

Personal income taxes, both at the federal and provincial levels, are the most significant revenue sources for Canadian government. Payroll taxes account for over 40% of Canada's tax revenues, and employers pay an integral part in the government's collection of these taxes.

Canadian employers are required to register an account with the CRA, collect information about their employees, calculate deductions, and then remit various types of payroll taxes applicable for the jurisdiction, or jurisdictions, where the work was done. Here's a basic list of payroll taxes applicable using the example of two of Canada’s largest provinces:

Federal

  • Canada Pension Plan (CPP)
  • Employment Insurance (EI)

Ontario

  • Employer Health Tax

Quebec

  • Quebec Pension Plan (QPP)
  • Health Services Fund
  • Quebec Parental Insurance Plan
  • Compensation Tax
  • Workforce Skills Development and Recognition Fund
  • Commission des nores du travail

Workers' Compensation Premiums

  • All provinces will also have you needing to pay premiums into that province’s Workers’ Compensation program, for example WSIB in Ontario.

For each person in your employ, the proper amounts need to be calculated for each of the above, applicable funds (not all employees will have to pay all of these taxes). These amounts can be found by referring to the published tables for each tax or by using the CRA's online calculator. Then, you must hold the funds in trust until it's time to remit to each of the agencies.

As an employer, you will probably have to answer payroll tax questions, including the question of what all these taxes are for. Let's take a brief look at each one.

Canada Pension Plan.

Established in 1965, this payroll tax funds Canada's social insurance program, which helps to fund Canada's public retirement income system. All Canadian workers who are 18 years of age and over are required to contribute to the CPP. However, there are certain rules around CPP deductions for those workers who have reached retirement age. There is a maximum amount of CPP that each employee pays per year so once that threshold is reached you no longer have to deduct the tax for the remainder of that year. Employers match workers' contributions to increase funding to the pension plan.

Employment Insurance.

Formerly called Unemployment Insurance, this payroll tax provides benefits to workers if they lose their jobs. Canadian employees pay a percentage of their salaries into the insurance fund; the amount they receive if they lose their jobs depends on their previous salaries, the length of their employment, and the unemployment rate in their local jurisdiction.

Workers' Compensation.

Like Employment Insurance, Workers' Compensation is a form of insurance for workers who face unexpected hardship in the form of wage replacement and medical benefits. This was Canada's first social program because both workers' groups and employers hoped it would reduce lawsuits. It's still managed by local jurisdictions, as it has been since the early 20th century, and it's still funded by employers based on their payrolls. Each province has different rate groups based on the risk of the work being done. The bigger the risk, the higher the premiums the employer will pay. These rates have a tendency to change on a yearly basis across each province.

Ontario Health Tax.

Introduced in the 2004 Ontario Budget, the Ontario Health Premium contributes around $3 billion to the health care system each year. The payroll taxes remitted to the Ontario Health fund are invested directly into the health care system, and only those who are residents of Ontario must pay this tax.

For more information about payroll tax questions, especially how they vary from province to province, contact us at The Payroll Edge. Whether you have difficult questions from your employees that need to be answered or you need help becoming compliant with payroll tax laws and guidelines, we can get you the help you need. A third-party payroll tax expert can make all the difference in the way your company operates.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Tax, Canadian Payroll Deductions, Payroll Tax Calculations, Payroll Tax in Canada, Payroll Tax Tips, Canada Revenue Agency, Payroll Tax Laws in Canada, Payroll Tax Laws

Subscribe to Email Updates

Recent Posts

Posts by Topic

see all