Hiring Canadian talent offers U.S. companies access to a highly skilled workforce at competitive rates, but the traditional path requires forming a Canadian corporation, registering with the Canada Revenue Agency (CRA), and navigating complex provincial labor laws. Fortunately, there’s a faster, more cost-effective solution: Employer of Record (EOR) services.
What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that legally employs workers on your behalf in a foreign country. The EOR handles all employment-related compliance, payroll, taxes, and HR administration while you maintain full control over day-to-day work assignments and project management.
For U.S. companies hiring in Canada, an EOR eliminates the need to:
- Form a Canadian corporation
- Register with the CRA for payroll accounts
- Understand provincial employment standards
- Handle Canadian tax remittances
- Manage benefits administration
- Navigate Canadian labor law compliance
Why U.S. Companies Choose EOR Services for Canadian Hiring
Speed to Market
Traditional entity formation can take 3-6 months. With an EOR, you can onboard Canadian talent in as little as 48 hours. This speed advantage is crucial for tech companies that need to scale quickly or fill critical roles.
Cost Savings
Setting up a Canadian subsidiary involves:
- Legal fees ($5,000-$15,000)
- Accounting setup ($2,000-$5,000)
- Ongoing compliance costs ($3,000-$8,000 annually)
- Administrative overhead
EOR services typically cost $499-$1,500 per employee per month, making them significantly more cost-effective for companies hiring 1-50 employees.
Compliance Protection
Canadian employment law varies by province. An EOR ensures compliance with:
- Federal employment standards
- Provincial labor laws
- CRA tax requirements
- Employment Insurance (EI) and Canada Pension Plan (CPP) contributions
- Workers’ compensation requirements
- Vacation and statutory holiday entitlements
The EOR Process: How It Works
Step 1: Initial Consultation
Discuss your hiring needs, job requirements, and timeline with your EOR provider. They’ll explain the process, costs, and compliance requirements.
Step 2: Candidate Selection
You identify and interview candidates just as you would for any position. The EOR doesn’t interfere with your hiring decisions.
Step 3: Employment Setup
The EOR prepares the Canadian employment contract, handles all necessary registrations, and sets up payroll accounts. This typically takes 24-48 hours.
Step 4: Onboarding
Your new Canadian employee signs the employment contract with the EOR. You maintain full control over their work assignments, project management, and day-to-day supervision.
Step 5: Ongoing Management
The EOR handles:
- Payroll processing
- Tax deductions and remittances
- Benefits administration
- HR compliance
- Employment documentation
You receive a single monthly invoice covering salary, employer contributions, and service fees.
Key Considerations When Hiring Canadian Talent
Employment Classification
Canadian law has strict rules about employee vs. contractor classification. Misclassifying workers can result in significant penalties. An EOR ensures proper classification from day one.
Provincial Differences
Employment standards vary by province:
- Ontario: 2 weeks vacation, 9 statutory holidays
- Quebec: 2 weeks vacation, 8 statutory holidays
- British Columbia: 2 weeks vacation, 10 statutory holidays
- Alberta: 2 weeks vacation, 9 statutory holidays
An EOR ensures compliance with the specific province where your employee works.
Currency and Payments
While Canadian employees are paid in CAD, you can typically pay the EOR in USD. The EOR handles currency conversion and ensures employees receive payments in their local currency.
Common Use Cases for EOR Services
- Software Development Teams: Hiring Canadian developers, engineers, and technical talent
- Remote Work Arrangements: Employees working from home in Canada
- Project-Based Hiring: Temporary or contract-to-hire positions
- Market Expansion: Testing the Canadian market before full entity formation
- Specialized Skills: Accessing niche talent pools in Canada
When to Consider Forming a Canadian Entity
EOR services are ideal for most companies, but you may want to form a Canadian entity if:
- You plan to hire 50+ employees in Canada
- You need to establish a permanent Canadian presence
- You’re making significant capital investments in Canada
- You require specific tax structures or business arrangements
For most U.S. companies, especially those in tech and software development, EOR services provide the optimal balance of speed, cost, and compliance.
Getting Started
Ready to hire Canadian talent without the complexity of entity formation? InfraDev provides comprehensive EOR services for U.S. companies, handling all Canadian employment compliance while you focus on growing your business.
Contact us today to discuss your Canadian hiring needs and learn how we can help you onboard talent in 48 hours.