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American Employers: Canada's Worker's Comp is Government Run

Posted by Stacey Duggan

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May 1, 2014 10:12:00 AM

Unlike the U.S., the workers compensation program in Canada is government run. Every Employer in Canada must register for a worker’s compensation account in every province that they have employees working in. 

Workers Compensation Form brought to you by The Payroll Edge

Each province has different rules as far as the registration process.

For example, in Ontario you cannot apply for a workers compensation account until you actually have an employee start date, in Nova Scotia you don’t register for an account until you have 2 workers and in Alberta you can pre-register regardless of whether you have employees or not.

Each province also has different registration fees and some may even ask for a pre-payment for new registrants. As an employer, you pay a certain percentage in payroll taxes to the provincial workers compensation board based on the wages of your workers and the risk associated with the type of work your employees are performing.

The bigger the risk of injury to workers, the larger the percentage used when calculating what is due, for example currently in Ontario a worker in a clerical role would cost an employer 0.22% of the worker’s wage in workers comp taxes. However a worker on a construction site in Ontario would mean the employer is taxed at 5.05%. 

If a worker is injured on the job, the workers compensation board will assign a claim adjuster who will investigate and make recommendations. The workers compensation boards in every province are in place to protect the worker and ensure employers meet health and safety standards. They can be a daunting authority to a U.S. company unfamiliar with the rules and regulations associated with the Canadian Ministry of Labour.

Many U.S. companies don’t realize that when their Canadian workers are injured, that they should complete their own investigation and that they have the right to appeal the board’s decision. They also tend to rely on their own legal counsel in the States to advise them on best practises across the border instead of engaging with a professional employment organization in Canada.

Lack of experience in Canada can lead to hefty fines for non-compliance so it’s important that U.S. companies engage in Canadian expertise, or rely on an experienced Employer of Record, when expanding their workforce to the great white north. 

Topics: Professional Employer Organizations, Worker's Compensation, Canada Revenue Agency, Canadian Employer of Record, American PEO

Where to Find PEO Services in Canada

Posted by Stacey Duggan

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Dec 24, 2013 9:00:00 AM

Where to Find PEO Services in Canada3In the States, businesses that are looking to ease their workforce administrative burden often turn to Professional Employer Organizations (PEOs) for help. PEO services cover everything from calculating payroll and issuing checks, to handling tax remittances and workplace safety compliance. Using PEO services, businesses are able to turn burdensome administrative tasks over to trained, experienced professionals. This allows the business to better focus their efforts on their core business objectives. If you’re looking for PEO services in the US, a simple Google search or old-fashioned telephone directory will point you in the right direction.

But what if you’re a US business looking to hire someone in Canada? In Canada, you’ll find the same services under a different name. Canadians use the term Employer of Record (EOR) to provide the services you would get from a PEO in the States.

A Rose by Any Other Name

In Canada, an EOR may use a variety of names to describe itself. Businesses providing EOR services may be payroll service providers, tax service providers, staffing agencies, and many others. Though they go by different names, EOR services are quite similar as PEO services in the states. Payroll and personnel administration is difficult enough for businesses with workers in a single country. Once you add in the complexities of managing a second, foreign payroll department, it can quickly become overwhelming. An EOR eliminates the need for a second payroll system, helping US businesses hire workers across the border as quickly as possible. For US businesses trying to expand their service reach across the border, these companies provide a vital service.

One-Stop Compliance

Without the services of an EOR, US businesses would have to establish government accounts, banking, insurance, payroll, and more according to federal and provincial law before a single employee could be hired. This process could take months, cost thousands, and the potential for mistakes is enormous. An EOR makes hiring north of the border seamless as they act as the employer in the eyes of the Canadian government. This mitigates the risks and ensures compliance when it comes to the rules and regulations in Canada. So when you’re ready to hire, you can.

Cross-Border Complexity

PEO services are incredibly popular in the US due to the difficulty of managing payroll on your own. Now, imagine trying to handle payroll laws in two different countries on your own. The complexities multiply exponentially. Keeping up with everything from Canadian payroll deductions to requirements for workplace signage can quickly exhaust the resources of a new expansion. Any mistakes, on either side of the border, could end up costing a fortune. Fortunately, EOR and PEO services make it easy to handle payroll administration with minimal difficulty, and minimal risk of errors.

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

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Canadian Payroll Regulations, Payroll Service, EOR, PEO, Professional Employer Organizations, CRA Payroll Tax, Canadian Employer of Record, Full Service Payroll Provider, PEO Services

How U.S. Companies Manage Their Payroll in Canada

Posted by Stacey Duggan

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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

Are PEOs (Professional Employer Organizations) Legal in Canada?

Posted by Ray Gonder

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Jul 30, 2013 9:00:00 AM

PEO Legal in CanadaFrom a purely business-sense point of view, it might seem optimal for your U.S.-based business to expand into Canada. The timing may be perfect, and the market may seem primed, but many companies get cold feet once they get a glimpse of the legal and logistical red tape they'd face by doing so.

U.S. companies operating businesses north of the border are familiar with the term PEO, which means "Professional Employer Organization," but they also know them by another term.

In Canada, the term EOR (Employer of Record) is used. An EOR can pave the way for your company to conduct business in Canada without the following hurdles;

  • Establishing Canadian insurance, banking, and financial infrastructure that is compatible with both your current infrastructure and the laws of Canada.
  • Establishing a Canadian administrative presence.
  • Registering and maintaining appropriate business accounts with all necessary Canadian government authorities and organizations.
  • Making regular filings and remittances to the CRA (Canada Revenue Agency) and other applicable government agencies.
  • Ensuring ongoing compliance with all Canadian Federal and Provincial regulations, including employment standards and health and safety policies.

Part of the problem with trying to jump all of these hurdles yourself is that some of these tasks are very difficult to manage from within the United States, even if you retain advisors in Canada. Your perceptions of the business world may not quite fit with the business environment in Canada. For example, most U.S. companies assume that their greatest risk lies in third-party litigation, but this isn't the case in Canada. In Canada, non-compliance with the Canadian government’s rules and regulations is a larger threat than lawsuits. This is just one example of how a Canadian-based EOR can save you from costly insurance, administrative, and payroll mistakes.

The best solution to this problem is to outsource payroll processing and HR management to a Canadian firm that has experience serving as an EOR. When you structure your Canadian operations in this way, your Canadian workers are seen as employees of the outsourced payroll processing firm. Therefore, your Canadian paper trails are thoroughly documented and absolutely compliant with Canadian laws and regulations.

You can then focus your resources and energy on the expansion and operation of your business instead of investing precious time on bureaucratic forms, conference calls with government officials, and reading up on books full of regulations. You will be able to operate confidently, knowing that your Canadian operations are up-to-date, compliant, and backed by the knowledgeable help of those with years of experience.

For more information about how The Payroll Edge can serve as your EOR in Canada, contact us. We're happy to answer your questions.

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

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll Deductions, EOR, Canadian Payroll Service, Outsourced HR Management, PEO, Professional Employer Organizations, Employer of Record, U.S. Companies operating in Canada

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