It’s common practice for American companies who have a Canadian office to manage that Canadian entity primarily from the US. This includes using their US human resources, payroll, legal and tax departments, among others, meaning these employees have additional responsibilities that go beyond their usual jurisdiction and expertise.
While this approach may seem pragmatic in some respects, this may not always be the best way to manage an entity abroad. Given the cultural and geographical proximity of the two countries, it can inadvertently introduce an array of challenges and potential risks. Approaching Canadian operations with the same strategies used domestically can potentially lead to oversights and mistakes.
In this article, we want to discuss an alternative, and more efficient way, of providing support to your Canadian offices. One that prioritizes compliance, safeguards your company from risk, and prevents the overextension of US-based employees. Let’s dive in.
How an Employer or Record (EOR) can help US Companies manage their Canadian offices
One of the simplest solutions for US companies looking to navigate the complexities of managing Canadian operations is to work with an Employer of Record (EOR).
What is an EOR?
An EOR is a firm that provides comprehensive HR and business management solutions for small to mid-sized companies. They allow the business to operate in a foreign country — in this case, Canada — without needing to establish a legal entity. The EOR becomes the employer on record for tax and legal purposes, while the US company retains control over the employees’ roles and responsibilities.
Benefits of Partnering with a Canadian EOR
1. Canadian HR & Compliance: Canadian HR rules and employment laws can significantly differ from the American regulations that US companies are familiar with. This includes everything from parental leave to sick leave and overtime pay. An EOR ensures your business operations remain within the confines of Canadian HR compliance, alleviating the need for your team to become experts in an unfamiliar legal territory.
2. Payroll and Tax Obligations: Staying updated on Canadian payroll, taxes, and the submission process to the Canada Revenue Agency can be a challenging task. However, when partnering with an EOR, you can rest assured that these obligations are taken care of in a compliant manner.
3. Intellectual Property Protection: A common oversight US companies make is assuming that their intellectual property (IP) is safe because their US workers signed American agreements. The enforcement of foreign contracts in Canada can be questionable at best. A good EOR can provide robust agreements that ensure the protection of the company’s IP in the Canadian market.
4. Stock Options: The rules surrounding stock option issuance are different in Canada compared to the US, including different taxation timing and rules. Navigating these differences can present a significant hurdle for US companies. A local EOR will have the expertise to issue US stock options to Canadian workers, ensuring compliance with all necessary legalities and taxation.
5. Healthcare Benefits: The Canadian healthcare system differs considerably from its US counterpart. Though Canadian healthcare is publicly funded, employees may require additional health-related benefits like wellness programs, mental health support, and supplementary health and dental coverage. Finding the best healthcare plans for your Canadian employees can be a challenge. Working with an EOR means you can be confident you are providing your team with optimal and compliant healthcare without needing to become an expert in another country’s healthcare system.
A Canadian EOR can support Canadian HR & compliance
Canadian HR rules and employment laws can significantly differ from the American regulations that US companies will be familiar with. This includes everything from parental leave to sick leave, and overtime pay. A EOR ensures your business operations remain within the confines of Canadian HR compliance, alleviating the need for your team to become experts in an unfamiliar legal territory.
A Canadian EOR can assist with Canadian payroll and tax obligations
Staying updated on Canadian payroll, taxes, and the submission process to the Canada Revenue Agency can be a challenging task. However, when partnering with a EOR, you can rest assured that these obligations are taken care of in a compliant manner.
A Canadian EOR can help protect your intellectual property
A common oversight US companies make is assuming that your intellectual property (IP) is safe because your US workers signed your American agreement. The enforcement of foreign contracts in Canada can be questionable at best. A good EOR can provide robust agreements that ensure the protection of the company’s IP in the Canadian market.
A Canadian EOR can help issue stock options across borders
The rules surrounding stock option issuance are different in Canada compared to the US including different taxation timing and rules. Navigating these differences can present a significant hurdle for US companies. A local EOR will have the expertise to issue US stock options to Canadian workers, ensuring compliance with all necessary legalities and taxation.
A Canadian EOR can help manage Canadian healthcare benefits
The Canadian healthcare system differs considerably from its US counterpart. Though Canadian healthcare is publicly funded, employees may require additional health-related benefits like wellness programs, mental health support, and supplementary health and dental coverage. Finding the best healthcare plans for your Canadian employees can be a challenge. Working with an EOR means you can be confident you are providing your team with optimal and compliant healthcare, without needing to become an expert in another country’s healthcare system.
As US companies expand into Canada, navigating the complexities of Canadian operations can be a daunting task. But by partnering with a Employer of Record (EOR), companies can effectively streamline many aspects of their Canadian operations with tailored services that improve overall business productivity and efficiency in both their US and Canadian offices.
Syndesus can help manage your Canadian office
The dynamic landscape of international business needs nuanced, expert solutions. Managing Canadian operations doesn’t have to be a burden that falls on your US team, instead, it can be an opportunity to enhance your business’s global presence. Syndesus, a Canadian company with extensive expertise in managing operations for US clients, can provide a streamlined, comprehensive solution whatever the situation.
Syndesus helps companies with PEO and EOR services, including immigration, benefits, HR, and payroll. Your administrative processes are taken care of while you focus on expanding your workforce and moving your company forward.
Reach out to us to learn more about how we can help you!
