3 Questions to Ask Yourself Before Expanding Your Business to Canada

Payroll software solutions

Extending your business to the Canadian market may be a great business move, but hiring Canadian employees is tricky because there is an entirely different set of employee management regulations in Canada. Even though there is a lot of potential for business growth in Canada, many US companies shy away from making the transition because of the great jurisdictional differences between US and Canadian business practices. The following questions will help you determine if you are prepared to expand your business to Canada and will enlighten you on the support available to American firms across the border.

1. Do You Have the Bandwidth to Manage the Payroll Services for Your Foreign Employees in Addition To Running Your Core Business?

Some of the responsibilities a business owner takes on by managing their Canadian employee’s payroll in-house include tracking employee hours, calculating their net pay, making the appropriate deductions and managing income taxes accurately. Because this can be arduous and drain resources from running the actual business, it may save you time and money to use professional payroll providers in Canada instead. In fact, over 85% of certified public accountants recommend you use professional payroll providers for your employee management if you have less than 50 employees. Professional payroll providers can take care of the details so that you only have to review and approve a single report, and you only have one invoice to pay.

2. Do You Have In-Depth Knowledge of Canadian Payroll and Taxation Management Regulations?

Canadian legislation on payroll management is incredibly complicated- there are over 190 laws and regulations that an employer must follow. US companies can easily make a costly mistake simply because they have to navigate so much legislation to stay in compliance. If you are not confident that you have a deep enough grasp of Canadian payroll laws to avoid making an expensive mistake, using payroll providers who specialize in Canadian business practices might be a good idea.

3. Are You Prepared to Meet Canadian Taxation Guidelines?

The Canada Revenue Agency (CRA) has identified that small businesses are the greatest source of uncollected taxes and has begun targeting them for audits. In addition to scrutinizing their taxation practices, the Canadian government regularly distributes new payroll deduction tables that a company must use to calculate their employee’s tax withholding. As a result, it is risky and potentially expensive to manage the accounting and taxes of the Canadian side of your business if you do not have a financial background.

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