U.S. companies operating north of the border are attracted by the availability of a skilled labor force. However they quickly discover that Canadian laws and taxes are very different from what they’re used to and that the penalties for making mistakes can be expensive. Payroll service providers can make the transition much easier, offering compete payroll and tax services.
Payroll in Canada: there is a difference
Despite a number of similarities in language and culture, the business environment in Canada is very different from the U.S. Employer of record services can help U.S. businesses ensure that they are in compliance with Canadian laws when paying their Canadian employees. That’s because payroll is a much more complex process than just issuing cheques regularly.
First of all, the correct amount of taxes must be withheld from employee payroll. Then there’s the record keeping. There are more than 190 regulatory requirements relating for employee payroll processing in Canada. Especially for smaller businesses employing less than 50 people, it can be important to ensure that there are no mistakes in meeting their payroll and taxes obligations. Smaller businesses may also lack the personnel, expertise and time to master a new set of regulations.
What is payroll processing?
Payroll service providers typically offer payroll processing as well as employment standards compliance services, making it easier for U.S. companies to set up operations north of the border. Payroll service providers can also help U.S. companies looking to hire Canadian staff.
With their knowledge of Canadian laws and regulations, they can take over crucial and difficult tasks like totaling hours, gross-to-net calculations for each employee, and calculating, withholding and depositing payroll taxes. They can also help businesses to prepare and file their tax returns accurately and on time. Especially for small businesses, out sourcing payroll can help avoid mistakes and penalties.
Meeting Canadian tax requirements
Making payroll mistakes in Canada can be costly. There are strong penalties, and in recent times, small businesses have been targeted for enforcement. That’s because the CRA has identified small businesses as the biggest source of uncollected taxes. That makes it a matter of some urgency for small businesses to ensure that they are in full compliance.
Payroll service providers can also handle other important tasks like HR Management, ESA and OHSA compliance and government remittances. This makes it easier for U.S. firms to hire Canadian employees, despite the difference in legal and tax systems. Outsourcing payroll solutions is a good choice for smaller businesses, which have only a limited number of personnel and a limited amount of time to devote to deciphering and meeting complex regulations.
Payroll service providers can help U.S. and international companies looking to hire Canadian workers. They can ensure that all regulatory and tax obligations will be met, avoiding costly mistakes. They also offer other important Human Resources and staffing services, making it easier for smaller businesses to focus on their core functions.