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How an American Firm Does Canadian Payroll (Up to date 2021)


With the world extra linked and extra jobs going distant, it’s no shock that US firms are in search of out expertise north of the border in Canada. In spite of everything, there are many advantages to hiring Canadian workers, together with value financial savings and numerous ability units.


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Whereas the advantages are clear, there are compliance and payroll concerns to take note of. When an American firm hires Canadian workers, it should abide by all Canadian payroll legal guidelines and be sure that these staff are paid in compliance with the federal government’s present payroll guidelines and rules. Although American and Canadian enterprise actions are fairly comparable, their payroll processes are completely different sufficient to make it harder for an American firm to do Canadian payroll. US firms have a couple of choices out there to them in terms of paying their staff north of the border—a few of that are higher than others.


An American firm may suppose that increasing enterprise operations into Canada and paying staff there may be comparable sufficient to American payroll to go at it alone. Nevertheless, the payroll legal guidelines are stringent and the tax necessities are completely different. Merely utilizing the identical payroll processing software program and following American deadlines and guidelines goes to get you into hassle. You’ll want related Canadian payroll software program and also you’ll must constantly keep updated with altering laws. Utilizing outdated data associated to Canadian payroll gathered even only a few months in the past received’t work—the legal guidelines change too typically to have the ability to depend on it.

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When you’re pondering of simply avoiding paying taxes altogether by classifying your Canadian staff as unbiased contractors, know that you simply threat being caught and having to pay heavy fines and penalties for misclassification. The federal government pays shut consideration to firms that classify their workers as such and should look intently into your corporation actions when you do.


When you’re a US firm paying Canadian workers internally, you’ll have to take action legally. This implies establishing a presence within the nation, organising the related insurance coverage and banking infrastructure, opening a payroll account, and studying about payroll legal guidelines and worker classifications. Extra than simply writing a cheque for hours labored, you’ll even be tasked with calculating the precise tax deductions and different contributions, in addition to remitting these withholdings to the precise authorities officers on time. Sound too difficult or dangerous? You will have different choices to contemplate.

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Payroll suppliers supply payroll companies for Canadians getting paid from US firms. Once you outsource your Canadian payroll processing to a payroll supplier, you may take compliance off your plate and outsource it to the Canadian consultants. You’ll be able to depend on the payroll supplier you rent to deal with the payroll calculations, classifications, pay stubs, tax filings, and all the remainder of the paperwork related to managing payroll. This might help be sure that your payroll for Canadian workers is all the time correct and authorized.


Your remaining choice is to interact an employer of report (EOR) for payroll and compliance in Canada. This selection is right when you’re not fairly prepared to ascertain a Canadian presence otherwise you wish to pay your staff remotely. Once you interact an EOR, your workers change into the EOR’s obligation, and the corporate will deal with all the executive duties related to paying your Canadian staff. Above and past what a payroll supplier affords, an employer of report may deal with advantages administration, human assets, well being and security, and extra. Additional, you may faucet into the EOR’s infrastructure, so that you don’t need to arrange your individual presence within the nation.

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When American firms broaden their enterprise actions into Canada, they need to be sure that their new north-of-the-border workers are paid legally and correctly below Canadian legislature. You’ll be able to attempt to go at it alone, however this can be a dangerous endeavour when you’re not accustomed to Canadian payroll legal guidelines. You’ll be able to outsource their payroll processing to a payroll service supplier, however the threat of noncompliance will nonetheless finally be in your shoulders. Lastly, you may work with an employer of report like The Payroll Edge, which can take over the obligation and the chance of using your organization’s Canadian workers, whereas providing all kinds of payroll, compliance, and HR companies.


What US Companies Need to Know about Paying Employees in Canada