From the Hotline: Hiring a Canadian Citizen to Work for a US Company

Question: How can an American company with no office in Canada hire a Canadian national to work for the company?

Answer: Here are a few recommendations that may support you hiring in Canada:

  1. Contract with a local payroll company or employment agency to actual employ the person. The agency would know the best way to compensate, provide benefits and manage the work rules for the employee.
  2. If you prefer for this employee to be a regular employee of your company, you will most likely need to involve your corporate legal staff and/or your Canadian local legal staff to determine how to establish the necessary company documentation for Canadian tax filing. Please consult with an expert in tax and legal on establishing the proper legal presence in Canada for this employee. You will then need to work with your payroll vendor or a Canadian firm to ensure that you are paying properly and remitting tax payments to the right tax office.
  3. Join Canadian HR and Payroll associations to better understand the requirements in the country: http://www.cchra.ca/en/and http://www.payroll.ca/AM/index.cfm.
  4. Hire the candidate as a contractor: In order to do that, you should direct the sales person to register as a sole proprietor with the provincial government. That person could work for you and would be paying taxes directly into the government. US Companies are typically not challenged by the US government about this arrangement (as they might be for “employees” versus “independent contractor” classifications for US workers), because the Canadian is not working on company premises, isn’t using company equipment, and is not required to pay taxes in the US anyway.