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 a Professional Employer Organization (PEO) 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 a professional employer organization (PEO).
What is a PEO?
A PEO is a firm that provides comprehensive HR and business management solutions for small to mid-sized companies. They require the business to have a legal entity in a foreign country — in this case, Canada — and provide services that ensure the smooth functioning of the business in that country. The entity itself, the liability of the employees and the responsibilities of those employees remain with the US company.
They also allow companies to minimize the potential risks associated with running an entity abroad where there will inevitably be different employment and tax laws. Partnering with a PEO allows companies to hand over many of the technical aspects of employment to experts, meaning their US-based team can focus on their primary roles rather than the nuances of Canadian operations.
A Canadian PEO 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 PEO 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 PEO 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 PEO, you can rest assured that these obligations are taken care of in a compliant manner.
A Canadian PEO 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 PEO can provide robust agreements that ensure the protection of the company’s IP in the Canadian market.
A Canadian PEO 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 PEO will have the expertise to issue US stock options to Canadian workers, ensuring compliance with all necessary legalities and taxation.
A Canadian PEO 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 a PEO 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 Professional Employer Organization (PEO), 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!
