Potential customers are in Canada, why aren’t you selling to them?
Expanding into a foreign market can seem very daunting, especially when you add a whole new set of rules for payroll and employment standards compliance. Most U.S. companies decide that the complication and liability of hiring foreign workers far outweighs the potential sales revenue that can be made with an expansion north of the border.
Or worse, they simplify the process and do one of two things;
1) Tax the Canadian sales person the same way they would their U.S. sales reps, converting the pay into Canadian funds and mailing out a cheque across the border.
2) Pay them as independent contractors.
The first way not only evades calculating the proper federal and provincial taxes in Canada as well as fails to remit them to the appropriate authorities but also sidesteps employment standards legislation as laid out by the Ministry of Labour (MOL).
The second way only works if the person is a true independent contractor in which the CRA, similar to the IRS, has very strict rules surrounding the qualification of these businesses. Unsurprisingly, an independent contractor is expected to be just that - independent. They set their own hours, provide their own tools, and can subcontract their work to other people. By law, you have very little say in how they conduct their business. When hiring a sales person you anticipate that they will learn your product or service, set and meet specific goals, represent your company brand to prospects and only work for you. A sales person, who is treated as an independent contractor, rarely meets the criteria to be paid as such in the eyes of the Canadian government.
While the above may seem easier, it’s illegal and can result in huge fines, back payments, criminal penalties, and the loss of your right to conduct business in Canada.
Not expanding isn’t the answer either when there is true potential for company growth.
There is a much easier and perfectly legal way to expand your sales force into Canada without the complication of learning foreign payroll and HR compliance.
If you’re looking to expand your sales team north of the border, get a Canadian Professional Employer Organization (PEO) to handle the payroll and HR for your Canadian workers.
The Payroll Edge is a Canadian employer of record whose forte is to help U.S. and foreign companies hire in Canada. We understand Canadian compliance when it comes to payroll taxation and employment standards across every province. For U.S. companies trying to match a current employment package for a Canadian worker, the cross border differences and even the terms can be confusing. We understand these variances and can help companies navigate this unknown territory.
Hiring a Canadian sales representative to promote your product or service can open up a new revenue stream for your business. By engaging with a PEO in Canada you don’t have to spend your time learning a new set of payroll and HR rules or taking confusing Canadian payroll classes, you can concentrate on other aspects of your business such as marketing and customer support.
Contact us to see how much time and expense you can save by hiring a PEO service. We’ll take care of the payroll, tax remittances, employment agreements, worker’s compensation, insurance and so much more!