PEO Services for Business in Canada: A Comprehensive Guide
Business growth is an integral part of any company’s operations. It is natural to strategize for the expansion of geographical coverage, both in terms of staffing and service or product offerings. Yet, the regulatory landscape of international labor and business law often represents a barrier to expansion plans. Not all companies can organize their international activities compliantly, and setting up a legal entity in each target market may be too costly for a dynamically developing startup.
In this case, you may need to rely on providers of professional employer organization services. Also known as PEO, these companies can help companies with a wide spectrum of HR-related, administrative, and accounting operations, such as paperwork, taxation, payroll, and compliance monitoring.
Planning an overseas expansion and wishing to do it without a burden on your core resources? PEO may be the best way to go. This article walks you through the nuances of working with these service providers for businesses in Canada to help you find the best PEO for your needs.
Planning an overseas expansion and wishing to do it without a burden on your core resources? PEO may be the best way to go. This article walks you through the nuances of working with these service providers for businesses in Canada to help you find the best PEO for your needs.
Want to grow your Canadian businesses hassle-free?
GEOR can assist you with end-to-end PEO service coverage. Hire staff across the globe, pay salaries and taxes without delays, and have your administrative tasks handled by our experts without draining your in-house resources.
What Is a PEO and How Does It Work?
A professional employer organization (PEO) is a third-party service provider that can deliver a wide range of PEO HR services to businesses. These firms are hired to simplify international hiring practices, as they can assume full responsibility for HR management, payroll, benefits administration, compliance, and risk management across jurisdictions, while the hiring company maintains full control over its daily operations.
What Are the Benefits of Partnering with a Canadian PEO?
Canadian businesses often resort to professional employer organization services because of the complex labor law landscape. One of the problems they commonly face is employer-employee relationship classification and misclassification risks. For instance, when hiring independent contractors in the EU or the USA, Canadian firms can run into issues because of that relationship’s classification as an employee relationship in the foreign jurisdictions. If misclassification is proven, the Canadian firm may suffer fines and legal disputes on the part of the Canada Revenue Agency (CRA).
Another reason to partner with a global professional employer organization is the scarcity of local talent in many industries. Candidates in Canada, especially IT specialists, software developers, and data engineers, lack the needed tech stack and experience, or voice too high salary expectations. That’s why many businesses in Canada face the need to search for qualified and affordable staff elsewhere, and they look for legally compliant methods of getting that staff on board.
Another reason to partner with a global professional employer organization is the scarcity of local talent in many industries. Candidates in Canada, especially IT specialists, software developers, and data engineers, lack the needed tech stack and experience, or voice too high salary expectations. That’s why many businesses in Canada face the need to search for qualified and affordable staff elsewhere, and they look for legally compliant methods of getting that staff on board.
What Is the Process of Using a PEO for Business in Canada?
Starting to work with a professional employer organization requires a couple of preparatory steps on your part to guarantee smooth collaboration.
Initial Steps
Here’s how you can proceed from an idea to its implementation:
Initial Steps
Here’s how you can proceed from an idea to its implementation:
- Choose the right provider based on a thorough comparison of prices, compliance expertise, and suitability for your industry.
- Define the scope of services you will need and negotiate the price for this package.
- Sign a contract with the partner that lays out all aspects of your responsibility.
- Establish a point of contact responsible for your staff.
How to Integrate PEO into Your Business Operations?
After signing a contract with the PEO provider, you will need to monitor the process of execution, from candidate selection to employment and management. The main aspects of integrating PEO into your business operations typically include:
- Passing the payroll processing documentation.
- Ensuring the alignment of payroll and tax deductions with local taxes and laws.
- Informing all employees about the employment arrangement they will have with your company and giving them PEO contacts for all concerns and inquiries.
Common Challenges When Using a PEO
Though everyone wishes to find the best PEO services, the reality is sometimes different. What challenges should you be ready for when hiring such firms? The most common bottlenecks include:
- Your loss of control over a certain portion of business operations. While initially, this should become a relief for your core team’s operations, a lack of collaboration or proper integration may cause operational problems, delays, and misunderstandings.
- Compliance risks related to PEO errors. If you choose an inexperienced provider, the burden of their mistakes may lie on your business eventually. Because of the co-employment arrangements, you can also be held liable for the grave mistakes of PEO, so it’s important to choose only credible partners.
- Rigid payroll and benefits terms. Some PEOs have fixed, rigid service packages that they aren’t ready to renegotiate. While they may work for some jurisdictions, entering new markets may become problematic on these terms.
How to Choose the Right PEO Provider for Your Business in Canada?
Finding the best PEO provider may be challenging, especially given the saturated market and the many service offerings. The main parameters that will point at the best professional employer organization are:
- Industry expertise. Some providers specialize in IT, while others offer a vast database of specialists in the real estate, medicine, or management sectors. Thus, you should choose a firm with relevant specialization to make sure it will address your staffing needs competently and quickly.
- Solid track record. The chosen provider of professional employer organization services should be fiscally stable, enjoy a positive reputation in the market, and offer references from past clients for review.
- Wide service coverage. Your chosen PEO should have a long and flexible list of services that you may consider when discussing a service agreement.
- Comprehensive support. The company should offer comprehensive support to you and your staff on all administrative, payroll, and HR matters.
- Transparent pricing. The cost structure of your service agreement should be clear and fair, with no hidden costs and conditions in fine print.
What Do PEOs Cost?
The cost of global PEO services is another dimension you need to take into account when planning workforce expansion beyond Canada. At first glance, the cost structure of professional employer organization services may look overwhelming, with many service aspects and arrangements affecting the final price. Here are a couple of examples of how the service cost is calculated.
According to Thirdsail experts, the average PEO cost per employee per month ranges from $400 to $800+ across the globe. The cost may depend on the employee’s specific qualification and tech stack. If the provider of employment solutions charges a percentage-based fee from the partner, companies should be ready to pay anywhere from 2% to 12% of their staff’s payroll.
Let’s illustrate the cost breakdown for PEO services using the service packages offered by GEOR:
Can a PEO Help Expand Your Business Outside of Canada?
One of the most common reasons for businesses in Canada to turn to an international PEO is their wish to access global markets. An experienced, certified PEO can help your business expand seamlessly to the target markets and jurisdictions without extensive legal preparation.
The service range you may expect from these companies includes:
By getting all these benefits from a chosen PEO service provider, you’re sure to achieve greater business results without investing extra time and resources into overseas staffing and operational expansion.
Let’s illustrate the cost breakdown for PEO services using the service packages offered by GEOR:
- Basic plan - $499/employee per month. This package covers payroll assistance and offers predictability and transparency in international payroll management for your staff.
- Advanced plan - $1,380 per employee. This package combines payroll with recruitment services, with GEOR assuming full responsibility for finding, hiring, and managing your staff.
- Pro plan - $1,870 per employee. The broadest service package includes talent identification, screening, hiring, and onboarding, followed by regular payroll management and the full spectrum of HR services.
Can a PEO Help Expand Your Business Outside of Canada?
One of the most common reasons for businesses in Canada to turn to an international PEO is their wish to access global markets. An experienced, certified PEO can help your business expand seamlessly to the target markets and jurisdictions without extensive legal preparation.
The service range you may expect from these companies includes:
- Navigating employment laws as a foreign country. A PEO partner will help you make contracts with international staff in compliance with your local and international labor law regulations.
- Payroll and taxation management across borders. Providers of professional employer organization services can issue payroll in local currencies and handle the full spectrum of tax withholding operations and social security deductions to comply with local taxation laws.
- Seamless staff hiring across jurisdictions. Working with a PEO is your safe bet for fast-tracking staff hiring across the globe without the need to invest in local legal entity setup.
- Provision of competitive employee benefits. PEO solutions are beneficial to staff because of access to local employee benefits providers and an opportunity to cover country-specific health insurance, pension, and paid leave needs for staff.
- Reduction of the administrative burden and costs. By working with a PEO company, you avoid expensive legal entity setup in the countries of hiring staff and can reduce the administrative workload of your core staff. This way, Canadian businesses can scale up quickly without extensive preparation in legal and operational aspects.
- Fast market entry and business growth. PEO services enable businesses to expand to new markets and hire top talent across the globe without legal friction and complications. This arrangement simplifies business growth and lets companies focus on operational performance instead of compliance, HR, and administrative tasks.
By getting all these benefits from a chosen PEO service provider, you’re sure to achieve greater business results without investing extra time and resources into overseas staffing and operational expansion.
Work with GEOR as an Experienced PEO for Businesses in Canada
GEOR is a reliable provider of global PEO services, with an international coverage of 100+ countries and a large database of 40,000+ talented tech candidates for your staffing needs. We have a solid experience working with Canadian partners and understand all the nuances of local employment laws to help you expand your workforce and international market presence without constraints.
Start Hiring Globally
With GEOR's services, you can onboard IT talent anywhere in the world and manage payroll locally while we handle all legal compliance.
With GEOR's services, you can onboard IT talent anywhere in the world and manage payroll locally while we handle all legal compliance.
Alexandra Krasnovskaya
Business development manager
FAQs
As a rule, you may count on the following range of services when partnering with a PEO: payroll administration, employee benefits and insurance provision, HR compliance and adherence to employment laws, recruitment and talent management services, HR technology, and technical support on all accounting and administrative issues.
If you’re a Canadian business wishing to hire staff internationally, working with a PEO will help you save costs and execute all hiring procedures in full compliance with Canadian and international labor laws. Such an arrangement is also time-efficient because the PEO assumes full responsibility for candidate screening and hiring. Thus, PEOs help Canadian businesses scale seamlessly.
When you partner with a PEO, you enter a co-employment arrangement to hire staff in the target jurisdiction. This means that the PEO company is the official employer of your staff for payroll, taxation, and reporting purposes. However, in line with the PEO contract, you are the staff’s direct employer who gives instructions, reviews the work done, and makes remuneration decisions.
PEOs typically charge from 2% to 12% of the employee’s annual salary from the hiring company. Others have a fixed cost per employee, typically starting from $400. Yet, the fees will depend on the needed staff’s qualifications and the breadth of the service package you want to order.