Wondering How to Do Canadian Payroll for a US Company?

Payroll service providers

If you are a U.S. employer who has outsourced a portion of their work to Canada, you might be wondering, “how do I pay my employees?” There are a few payroll differences between U.S.A and Canada that you need to be aware of to stay compliant with both countries’ payroll laws and regulations. For some companies, the many differences in payroll deductions for a Canadian professional gives them pause, which is unfortunate. There are ways to make the process of doing payroll easier; as those with experience know, it is more than signing a check.

Canadian payroll deductions are different from U.S. deductions. According to the Canada Revenue Agency website, no Canadian employee is allowed to work more than eight hours in one 24 hour period. Another feature is overtime pay begins after the employee has worked 40 hours in one week, and they must never work over 60 hours in one week. Canadians also have Employment Insurance, or EI, and the Canada Pension Plan, CPP. You need a ruling from a CRA official who has looked over your work documents to determine eligibility for payment to pensions plans, insurance, and extra hours. There are more than 190 legislative laws governing payroll processes.

Payroll outsourcing can be helpful to a business that would prefer to have someone else provide payroll processing services. For small businesses especially, 85% of certified public accountants actually recommend using a payroll outsourcing provider to handle things. Smaller businesses, those with 50 or fewer employees, are less likely to have an experienced payroll clerk on hand, or to have an experienced human resources professional. Outsourcing both to a payroll service provider could, according to experts, lower your costs and save you time. You want to be able to focus on the business side of things, instead of worrying about the possible penalties come tax season.

Small businesses especially can benefit from payroll outsourcing. The Canadian government website does provide updated tax deduction tables on its website for business owners. Though it can still be difficult for U.S. employers to confirm they are following all the regulations when they do payroll.

Which would you find easier, filing the paperwork yourself or using an outsourced payroll service? Let us know in the comments.

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