US payroll for a Canadian company — can I handle this myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: federal obligations start with an identifier and deposits on a schedule tied to payroll size.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
What do we need before paying our first employee in the United States?
A federal employer identifier, a federal withholding and deposit arrangement, and then the state layer, which is separate and does not follow automatically. At state level that usually means a withholding account and an unemployment insurance account in the state where the employee physically works, and often a registration of the company itself with that state's business registry. The corporate question arrives at the same time, because an employee working in a state is generally enough for that state to treat the company as carrying on business there. Sequence matters: the identifier gates most of the rest, and several state accounts take weeks to open.
Which state do we register in if our employee works from their own house?
The state where the employee physically performs the work, which is their home state — not the state where the company chose to incorporate, and not where any US customer sits. This is the point that most often goes wrong for a Canadian company making a first hire, because the instinct is to register once, in one convenient state, and run everything through it. State obligations do not work that way. They are separate from federal ones, they vary between states, and each state with an employee in it generally wants its own accounts, its own returns and its own calendar.
Does hiring a US employee mean our Canadian company owes US corporate tax?
It raises the question, and the answer turns on more than payroll. An employee working in a state is usually enough to give that state a claim, and state-level nexus is not governed by the treaty positions Canadian companies often rely on federally. At the federal level the analysis is different again, and depends on what the employee actually does rather than simply on their being there. The two levels have to be answered separately. What you should not assume is that carrying the payroll obligations correctly has disposed of the corporate ones — they are triggered by the same hire but tested independently.
How often do we have to deposit US payroll taxes after we start?
Deposit frequency is assigned rather than chosen. It is set by reference to the size of your payroll obligation over a look-back period, so a new employer starts on the schedule the rules prescribe and can be moved as the payroll grows. Missing a deposit date is treated more severely than filing a return late, and the penalty attaches to the deposit itself. The practical implication for a first-time employer is that the calendar has to be built into payroll from the first pay run, and reviewed when headcount changes, rather than confirmed once at set-up and left.
Do we need unemployment insurance registration for a single US employee?
Generally yes, and in the state where that employee works. Unemployment insurance sits at state level, with its own account, its own quarterly wage reporting and its own rate, which for a new employer is set by the state rather than by experience. There is a federal layer as well, calculated separately and reduced by what is paid at state level. It is a common gap when a Canadian company sets up a first US payroll, because the withholding account is the obvious registration and the insurance account is not — and the two are usually applied for separately.
Can we keep a US-based employee on our Canadian payroll instead?
It is rarely a solution, because the obligations follow where the work is performed rather than which payroll issues the pay. Running Canadian payroll for someone working in a US state usually means withholding to the wrong country, no US federal or state withholding at all, unemployment insurance unregistered, and year-end slips the employee cannot use to file their own US return. The correction is harder than the original set-up, since it involves unwinding Canadian source deductions as well as registering and filing late in the United States. Deciding this before the first pay run avoids both.
What happens if I have not filed for several years?
Missed years are handled as one package, not one at a time, because the route chosen for the first year determines the relief available for the rest. Each country has a disclosure or relief programme with its own conditions, and entering the right one — before the authority contacts you — is usually what keeps penalties down. Filing quietly outside a programme forfeits that protection. See catching up on missed returns.
How many days can I spend in a country before I become tax resident?
It depends on the country, and a day count is only ever the start. Many use a threshold in a tax year, some also look at averages across several years, and some have no day test at all and decide on where your home and life are. Two countries can both conclude you are resident, which is what the treaty tie-breaker exists to settle. Counting days without checking the tie-breaker is how people end up filing as resident nowhere. See the residency tie-breaker.
