How Do You Work For A Canadian Company?

May 3, 2015 3:48 PM

Are there any Mefites that have worked in the US (as a US citizen) for a Canadian company? How does it work with taxes, benefits, etc? This is going to become a very relevant issue for my wife tomorrow, and Google has not been a lot of help in finding authoritative information.

Specifically, we are interested in what things we should be negotiating, such as getting paid in CAD vs. USD, how tax withholding is handled, how much they might be saving (or spending extra) in payroll taxes by having a US employee.

If it matters, the company is a tech startup.

Anything else we should be concerned with?

posted by COD to Work & Money (5 answers total)

I've done the reverse and what they did was hire a HR staffing firm to pay me in Canadian dollars covering all my appropriate Canadian things. We agreed I would get the local stat holidays, which I cared about. If the company is willing to do this it will be a lot simpler for everyone.
posted by jeather at 4:38 PM on May 3, 2015

For a few months this year I lived in the US (as a dual citizen) while working for a Canadian company. I can't help with the tax stuff but oh my gosh yes get paid in USD. I took a 20% pay cut the minute I crossed the border into the US and it sucked.

Also remember to negotiate for additional salary if they don't have US-based benefits.
posted by jess at 6:29 PM on May 3, 2015

Best answer:

• Your wife won't be an employee of the Canadian company, she will be a contractor.
• The Canadian company won't do any income tax withholding or deductions, or make any contributions to EI (employment insurance) or CPP (Canada Pension Plan), since that's not done for contractors and would be pointless for a US-based worker anyway. See the links to calculate the contributions a Canadian company would make for regular employees.
• She won't receive a 1099 form like contractors for US companies do.
• She will have no tax liability to the Canada Revenue Agency, but will have to report her income to the IRS.
• She will have to pay US self-employment taxes, so she should take into account how much those will be (relative to usual employer contributions to EI and CPP) when negotiating salary.
• I very much doubt a Canadian startup would want to touch US benefits with a ten-foot pole (they would probably need a US subsidiary for that anyway, in which case your wife would be an employee of the US subsidiary and the situation would be no different than any other US employer).
• If your wife needs to travel to Canada, she will not be allowed to perform any work in Canada without applying for a work permit or getting a TN visa (under NAFTA). Business meetings etc. are ok but she she should make sure that, when asked at the border, she says she is "meeting with clients" and not "working". If she does need to work in Canada, TN visas can be acquired at the border, but there is a very specific list of job titles and qualifications permitted and it is best to have her ducks fully in a row before showing up at the border.

posted by Emanuel at 1:45 AM on May 4, 2015 [2 favorites]

Oh, and on being payed in US vs. Canadian dollars: probably best to be payed in US dollars if she wants stability, but the Canadian company might prefer to pay her in Canadian dollars because they want stability. She should be familiar with the exchange rate and historical patterns. The Canadian dollar is usually worth less than the US dollar (currently by about 20%, but was 25% a couple of weeks ago), but it can fluctuate a good bit and, and sometimes is near par or worth more, largely depending on the price of oil (among other factors). So basically if she thinks the oil price is going to go up a lot, it might not be such a bad thing to be payed in Canadian dollars since they could become worth more. But it's a gamble.
posted by Emanuel at 1:53 AM on May 4, 2015 [1 favorite]

Response by poster: Thanks all. She took the job. Now the adventure begins.
posted by COD at 5:01 PM on May 10, 2015