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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

Canadian Worker's Compensation: What U.S. Companies Need to Know

Posted by Stacey Duggan

|

Mar 17, 2014 9:05:00 AM

Workers Compensation Board in Canada is Government run

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 and 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 3 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 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% in workers comp taxes. However a worker on a construction site in Ontario would be taxed at 5.05%.

If a worker is injured on the job, a 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 they should complete their own investigations and 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 practices across the border.

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. 

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

Topics: Ministry of Labour, Payroll Tax in Canada, Employer of Record, U.S. Companies operating in Canada, MOL, Worker's Compensation, Canada Revenue Agency, Canadian Employer of Record, Paying Canadian Workers, Canadian-Based EOR, Canadian EOR

Ontario Independent Operators in Construction Must Have Worker’s Comp Coverage

Posted by Stacey Duggan

|

Dec 10, 2013 1:45:00 PM

Ontario Independent Operators in Construction Must Have Worker’s Comp CoverageKeeping up with changing workplace regulations is challenging. Sometimes, those changes are huge, and can’t escape notice. Other times, they’re more subtle, but can still have a huge impact. The upcoming changes brought about by Bill 119 can seem small on the surface, but failing to abide by them can have an enormous impact on your business. Bill 119 governs that independent operators in the Ontario construction industry must have their own Worker’s Safety and Insurance Board coverage as of January 1, 2014.  Companies who hire these independent operators also need to be aware of this law as audits ensuring compliance are scheduled to start after the law comes into effect.  A WSIB auditor on a site with many non-compliant independent operators will soon turn to the head contractor for explanation and to lay the responsibility. To avoid any fines, work stoppages, or premium back-payments, it’s a good idea for anyone in the construction industry to understand the new regulations, the rules around who needs to have a WSIB account and what happens if an independent operator on your work site fails to have one.

What is a WSIB Clearance Number?

The number is issued by the WSIB to businesses and contractors who are registered with the board and whose accounts are in good standing. To receive a clearance number, the contractor or business must have a current account with the WSIB, must be appropriately classified, must be current on all reporting and remittances, and must be current on all payments. Once these things are verified, the WSIB will issue a clearance number that is valid for a maximum of ninety days.

Who Needs a Clearance Number?

Virtually all Ontario independent operators, contractors, and sub-contractors must have a valid clearance number before beginning work. The number must be maintained throughout the duration of the project. If the project lasts longer than ninety days, the number will need to be renewed. If the number can’t be renewed due to a lapse in the contractor’s account standing, the work being done by this particular contractor must stop until the account is reconciled.

Who’s Responsible for Getting the Number?

While the WSIB clearance number is issued to the independent operator, the hiring party is equally responsible for ensuring that a current clearance number is in place before work begins. The hiring party must ensure that any contractors or sub-contractors have a valid clearance number before allowing them to begin work on any project.

What are the Penalties Involved?

Allowing a contractor without a clearance number to begin work on a project can carry significant direct and indirect penalties. Hiring an Ontario independent operator who doesn’t have a valid clearance number is an offence under Bill 119. Convictions for violating Bill 119 can result in fines of up to $100,000 per offence. If a contractor doesn’t have a clearance number, or if their number lapses, all work involving them must stop—costing you time and resources. If a contractor hasn’t been paying their WSIB premiums, the hiring party can also be held responsible for those costs.

Just One Small Change

As you can see, this one minor change to workplace regulations can have a significant impact on your business. This small change also has layers of complexity that can change who it applies to, and when. Failing to understand these complexities will end up costing your business either way.

For help understanding Bill 119 Click Through to http://needwsibcoverage.ca/What Are You Leaving to Chance by Handling Payroll on Your Own

 

Topics: Payroll Service Provider, Worker's Compensation, WSIB, Workplace Regulations, Ontario Independent Operators, Ontario Construction Workers, Bill 119

Bigger May Not Always Better When it Comes to Payroll Processing

Posted by Karen McMullen

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Nov 1, 2013 9:00:00 AM

Bigger May Not Always Better When it Comes to Payroll ProcessingBusiness owners too often fall for the idea that bigger is always better. The huge payroll processing service with the flashy ad campaign must be great, right? They can afford huge billboards, sharp uniforms, and take up an entire floor of the new office building downtown—so they must be great, right? Of course, if they’re that great, why are they spending so much money and effort to convince you of how great they are? Maybe they do have great products and services, but something is lacking that makes them have to work so hard to attract new clients. Often, with large payroll processing providers, the thing that’s missing is personalized service. In a large office, with so many clients, it can be impossible to get to know each business on an individual basis. If you don’t know the business, how can you ever really know what the business needs?

I’ll Have to Refer You to Our Website

When you have tax or payroll questions, it would be nice to get an answer that’s specific to your business. A generic, one-size-fits-most web document isn’t going to address your particular concerns. You’ll have to read the document, decide what’s relevant to you, and then interpret how it applies to your business. Aren’t you using a payroll processing service to avoid these kinds of hassles?

A large organization isn’t going to take the time to research topics and how they apply to your business. When you call with questions, you’ll get generic answers and a web address for supporting documents. After that, it’s up to you to do the research and apply your findings.

Looks Good Enough to Me

At the end of the pay period, your payroll processing service will take the information you send them, enter it into their system, and cut the cheques. Error checking, if it exists, will only look for obvious arithmetical errors. Mistakes that would be obvious to anyone who knows about your business will be ignored or overlooked. It will be up to you to rectify any errors, and you could be charged extra by the payroll processing service.

What happens if there’s a data entry error, or somebody forgets to log in or out? Transposition errors could have your janitorial and senior marketing staff switching salaries. A simple, common-sense check of your data would reveal these errors, and correct them before they result in erroneous cheques. A large payroll service isn’t going to have the time, or the familiarity with your business, to catch these errors in time.

Sorry, We Don’t do That

Do you make remittances for any taxes other than the payroll tax? If you’re an employer in Canada you make worker’s compensation remittances and if you’re in Ontario or Quebec you have other taxes as well. Large payroll services typically only provide remittance services to your payroll tax account. This leaves you responsible for all of the others. Even though you’re paying for a payroll processing service, you could still end up doing some of the work you’d expected them to handle.

If you’re handling some remittances, you might as well be doing them all. If you’re outsourcing remittances, they should all be handled by a single provider. Having half of them done in-house, and half done by a payroll processing service is an invitation to errors. Having multiple service providers handling your remittances is also an invitation to disaster. A large agency may not have the time, or interest, in handling remittances to other agencies.

Smaller is Sometimes Better

Individualized attention can be a huge benefit when it comes to payroll processing. Those large agencies may do a lot of things very well, but personalization isn’t one of them.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Service Provider, Outsourced Payroll Service, Payroll Tax Calculations, Government Compliance, Payroll Calculator, CRA, Payroll Deductions, Remitting Taxes, Worker's Compensation

How to Do Small Business Payroll in Canada

Posted by Ray Gonder

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Jul 26, 2013 10:30:00 AM

Small Business Payroll in CanadaSetting up a small business requires an incredible amount of attention to detail. You need a business development program, a place to work, a marketing strategy, and financing. Each of these tasks will affect the way your business runs and whether or not it will be successful. As soon as you hire employees, you also need to learn how to set up systems and policies for your payroll. Although payroll may seem like a simple, relatively unimportant task in the big picture of your business, it's critical to your business' functionality and compliance with the law.

To break down the intricacies of Canadian payroll, let's take a look at small business payroll in six steps.

1. Opening your CRA payroll account.

One of your first orders of business as a new small business owner is to acquire a Business Number and open an account with the Canada Revenue Agency (CRA). You can open your account by going to CRA's Business Registration Online or by sending an application to the CRA by mail or fax. After you've finished your registration, the CRA will mail you a confirmation letter that contains your business and payroll account number, and you can commence operating your payroll.

2.  Opening up a Worker’s Compensation account.

Different from the US, every Canadian worker is covered under the government worker’s compensation program.  Each province has their own premiums and rules surrounding these accounts as well as different remittance cycles from the schedule set up for your payroll account. What rate group your workers fall into depends on the type of work and province as well. A small business owner should have an understanding of these rules, rate groups and remittance schedules so they can be assured that they are not over or under paying premiums.

3. Calculating Deductions.

One of the more mundane jobs as a small business owner is calculating deductions from your employees' paycheques. Each time you run payroll, you will calculate CPP contributions, EI premiums, and income tax deductions based on the amounts you pay your employees. In addition, you also must calculate your (employer's) share for each of these deductions. As well as the payroll deductions, you must calculate your worker’s comp premiums to be paid based on each employees pay.  To further complicate the calculating of deductions, certain tax groups have minimums and maximums that you must track.  For example in Ontario you do not have to remit Employer Health Tax until you have reached a payroll of $400,000. For the Canada Pension Plan you no longer deduct this tax once the employee has reached the maximum to be deducted.

4. Remitting Payroll Deductions.

Based on the schedule assigned to you by the CRA and the provincial Worker’s Compensation Board, you must remit these taxes on time or face the accrual of interest and fines for late payments. Don’t forget that these schedules can be very different and forgetting a deadline is not an excuse the various government bodies will accept.

5. Providing Employee’s Paystubs.

Each time you pay an employee you must provide them with a paystub outlining the gross amount, deductions taken broken down by tax type, and any other additions or deductions taken from their pay.  Most employers also show the ongoing year to date totals of gross pay, taxes paid and net pay.  As well as all of these, most paystubs will show the employee their vacation accrual as well.

6. Filing Information Returns.

Each February, you have a responsibility as an employer to complete and file T4 Summaries and T4 Employee Slips for income tax purposes. Each of your employees should receive a T4 Slip from you that accurately states the total amount of CPP contributions, EI premiums, and income tax deducted from their paycheques for the entire previous year. The T4 Summary is a total of all the amounts reported on your employees' T4 Slips, and it's submitted either electronically or physically to the CRA.

As you can see, payroll is an important part of any small business' operations. If you're overwhelmed with the meticulous, ongoing nature of payroll, or if you are a US company unfamiliar with Canadian payroll rules and regulations, consider outsourcing payroll processing to a third party to save you time and allow you to focus on other aspects of your business.

7 Signs It's Time to Outsource Payroll

Topics: Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Payroll Service, Worker's Compensation, Canada Revenue Agency, Small Business Operations, Small Business Payroll

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