Working in Canada for a U.S. / foreign employer or clients

Welcome to the resource page for Canadians moving back and continuing to work for a U.S., UK, or other country employer or clients as a remote employee or some form of contractor, independent professional, or other business and legal arrangement.

Here you will find an overview of your options, key considerations, and resources to help you navigate a move back to Canada while keeping a close relationship to your existing employer. This resource also includes options for setting up your work arrangements if your employer doesn't want to (or legally can't) keep you on as a full employee while you are not in their country.

Or maybe you don't want to be a full employee any longer but instead are ready to be more independent while continuing to offer services to your past employer and/or to other clients. This resource is also for you!

Let me address the most frequently asked question right now:

"Is it possible to live in Canada and work for a U.S./foreign employer or clients?!?"

Answer: Yes!

There, that was easy! Now onto the necessary deeper dive into the topic and full details on "how"...

Topics & Resources

• Introduction
• Background: Why this resource?
• Definitions: Employee, contractor, independent professional business, service provider, consultant / advisor
• Continuing to be a full U.S. / foreign employee working in Canada
• Starting a Canadian division of your U.S. / foreign organization
• Becoming a contractor
• Becoming an independent professional business
• Becoming a service provider
• Becoming a consultant / advisor
• Logistics: Getting paid, invoicing & currencies, banking, taxes
• Professionals in Canada who can help
• Other Resources
• Your tips, suggestions, and feedback?
• Professional help for your move back

---

Introduction

Moving back to Canada has traditionally come with the need to find a new job or career for most returnees. In recent years I have asked many of my clients this question when we come to the topic of jobs and careers in Canada:

"Have you asked your current employer if you can work remotely from Canada?"

Until the start of 2020 I would usually hear this response:

"Oh, they would never allow that."

I would sometimes gently persist with "I hear that getting employment in Canada when you return is a serious concern. May I suggest you ask your employer if it might be possible to work remotely, even as transition?"

And what did I hear back a few days later?

"Wow! Yes, they were fine with me working remotely from Canada! I can't believe it!"

Then in 2020 a tidal wave of change happened. Clients starting telling me up-front that they were going to move back to Canada and continue working for their current employer. And then the question changed to:

"How do we manage this?"

But before we answer this question let's explore some background and definitions to help you understand that there are many different possibilities for how you can set up and manage a remote work arrangement...

Topic List | Your thoughts? | Professional Help

---

Background: Why this resource?

The changes that began in 2020 and continue today are profound. Work that could be performed anywhere suddenly started to be done at home or somewhere else, like in Canada. What used to be a "niche" idea with strange sounding names such as "telework", "working online", "digital nomading", etc. became household terms and realities for tens of millions of people who knew little about the concept before then.

What was missing has been a frame of reference for the new realty. The standard "Get up at 7:00am - shower - dress - coffee at Starbucks - arrive at office at 8:30am - work until 5:00pm - yoga class / gym - drive home (stopping for another Starbucks treat perhaps) - make dinner - watch Netflix - go to sleep" routine was completely changed for millions of people in North America and many more around the world.

For them it became "Get up at (?) time in the morning - jump on the computer - make some calls and have Zoom/MS Teams/Google Meet meetings - have a shower (maybe) - do some yoga - grab coffee and food from the kitchen whenever desired - do more work and make more calls - walk the dog - maybe go through a drive-thru food place just to get out of the house - watch some Netflix - call friends for the 5th time because you are bored - go to the gym."

And what if you have children? Life routines which included daycare or school had to be integrated in this new work system. How do you have your children at home while you work?!?

Needless to say it caused varying levels of chaos in people's lives. But throughout 2020 and 2021 a new reality and mental frame of reference began emerging: The work remotely, work-from-home ("WFH"), work independently employment and lifestyle reality. And this has led to some interesting changes:

• People starting selling inner-city condos and buying houses so they could have more space to live and work at home, particularly if they have children. By mid-2021 prices of inner-city condos in North America were still lagging in demand and struggled to maintain stable prices. In 2023 condo prices are now rising again while house prices in suburbs and satellite towns and semi-rural areas are falling. In part this is because many organizations are requiring part-time or full-time office returns.
• Renovations and changes were made: Sound-proofed and well-appointed home offices, a focus on multi-purposing rooms so that you could do yoga / exercise and then later watch Netflix in the same place. Kitchens and living rooms were upgraded to reflect their increased use and focus in the home.
• Technology and independent work skills were quickly learned or upgraded. If your work required regular Zoom meetings? "I have to learn how to do video meetings and online collaboration really well...and learn how right now!!"

These and many other changes led to another major shift of reality and mental frame of reference:

"Why are we living here? If we are working from home why don't we move our home to somewhere we enjoy living more? Hmmm...why not back home to Canada?"

So this is where we begin: This guide is a set of resources for those who are ready to move back to Canada but will continue to work for your current employer as a full employee, as head of a new Canadian division, or as a contractor, service provider, independent professional, or consultant/advisor.

Topic List | Your thoughts? | Professional Help

---

Definitions: Employee, contractor, independent professional business, service provider, consultant/advisor

Most people start with the assumption they will continue to work for their current employer and simply live in Canada. But they quickly learn that there are complications for their employer and themselves in terms of logistics, legal issues, taxes, risk, security, and more. So there becomes a new and life-complicating question:

"How do I set up this 'work from Canada' arrangement?!"

Let's start by looking at some definitions that can help you understand different ways you could set up your relationship to your previous employer.

Employee: This is when you continue to work for an organization that is geographically and legally operating outside of Canada. When you move to Canada you may continue to be on their foreign payroll and pay taxes in that country for a little while. But legally this can't continue for long. More on why this arrangement can't stay this way for long when you are living in Canada full-time is detailed and explored below.

Head of a Canadian division: This is when you now work for a newly formed wholly-owned Canadian division of your U.S. or foreign employer. You may be the only employee at first or you may be joined by more employees. See the full notes on this later in this resource on why adding more employees might happen.

Contractor: This is when you are not an employee of the company and are not on their payroll. Instead, you invoice your "client" for work provided. You may have some form of work contract but it is a legal agreement to do certain work under certain conditions (an NDA for example), not an employment contract. Most people already know the concept of a "contractor" while living in the country where a "client" is. Not everyone knows that you can also be a contractor to a foreign client when you are living in Canada. Note: California and a few other U.S. states have strict contractor laws that effectively deem you a kind of employee and possibly a resident of the state even if you live in Canada. Most other places in the U.S. and the world do not have these laws.

Independent professional business: You are a professional who does independent work for clients just like an independent plumber, lawyer, or accountant would do. You have a business that is either a sole proprietorship or a personal corporation ("LLC"). You invoice your client or clients for services rendered. Note: Having more than one client is advisable in this case. See tax considerations later in this resource.

Service provider: You work for a company (your own) which provides services to clients or other firms. Examples include an accounting firm, law firm, plumbing firm, security firm. The difference is that you are an "employee" of your own company, not an individual professional. This is a less usual way to go and works best when you have many clients and will have partners and/or will hire one or more employees to help you, such as an assistant or others who do the same work as you do.

Consultant/advisor: You do not do "work" for your client but instead add value by providing expertise in the form of consulting on projects or when unusual problems or issues arise that are outside of the normal course of the organization's day-to-day operations. A public relations consultant, technical advisor, or legal advisor are examples. You invoice clients for your professional services. This role is much easier from a legal and tax perspective for your clients. Note: You do not work for one client in this case, but several, or potentially dozens. It is similar to an independent professional business or service provider except that you are not providing a service that is critical to the day-to-day functioning of your clients' operations.

Topic List | Your thoughts? | Professional Help

---

Continuing to be a full U.S. / foreign employee working in Canada

This section is broken down into two parts: Moving back to Canada and continuing to work temporarily for a U.S. or foreign employer and working permanently in Canada.

Part 1: Nothing changes: You simply move back and continue working temporarily in Canada.

You can move first and then figure out logistics and legalities in the months after you arrive. Depending on how busy your work and personal life are this can be an attractive option. For example, if you have a complicated work context at the same time as a move back to Canada you won't want to divide your focus and might instead choose to minimize your stress by changing nothing about your employment status at this point.

Some positives and negatives to this choice:

Positives:

+ You leave doors open: You are flexible in the first few months in Canada should you choose to go back to the U.S. or other country you came from.

+ You can manage your tax situation more easily if there are complicated things happening with your finances (stock options vesting shortly after you move back, ownership in a business, complicated legal issues around an estate being wound up, etc.)

Negatives:

- You have only a short period to sort out a more permanent solution. A few months at most before Canadian tax regulations require you to be treated as a Canadian employee (see later in this document for more on this).

- You have the added work of arranging your legal, tax, and logistics for being a remote employee in Canada after you move back rather than having it done before you leave.

Part 2: You work indefinitely in Canada as a formal U.S. / foreign employee but engage a Canadian human resources company to manage your legal status here.

Important: You cannot legally stay a U.S. / foreign employee working in Canada past 60-90 days when living here permanently without starting to pay taxes in Canada (monthly withholdings and remittances). You must either start doing this yourself, transfer to a Canadian division of your organization and work under them, or set up with a human resources company who will manage you as a Canadian employee from the perspective of the Canadian government.

Some positives and negatives to this choice:

Positives:

+ A "human resources company" is typically a PEO firm ("Professional Employee Organization") who handles your Canadian government CPP, EI, income tax, benefits, etc. You simply work in Canada as if you are still working in the U.S. or elsewhere in the world. Your U.S. foreign company pays the PEO firm a monthly fee for this service.

+ This arrangement is much less work for you and/or your employer in terms of administering the arrangement. Your U.S. / foreign employer's HR department will breathe a sigh of relief.

+ You get HR support specific to your Canadian context from your PEO firm, including Canadian benefits.

+ As a U.S. / foreign employee there can be a wider set of options available for retirement plan contributions and for managing retirement investments more easily in the employer's country.

+ If you are a Canadian citizen only you may more easily be able to apply for U.S. citizenship (dual-citizenship) if you are eligible to do so. This may also be the case in other countries as well.

- You and your employer must be careful with your legal status in the U.S. or other country. Unless you are a dual-citizen your status in the employer's country has to be managed carefully from a visa/immigration perspective.

Negatives:

- Your employer pays a monthly fee to the PEO firm. Given that your employer no longer has you costing them office space and other costs such as health care (which is public in Canada and employers only pay a small portion), this is not only a trade-off but can save them money!

- You do not get full access to the Canadian system. For example, the U.S. does not recognize Canadian TFSA's and for tax reasons you might choose to not use them.

- You pay higher Canadian taxes than the usually lower U.S. taxes when receiving a salary of about CDN $75k per year and up. Other countries? You might end up paying more or less tax. And unlike a contractor you can't write off your "business" expenses when you are a full employee of a U.S. / foreign organization.

Topic List | Your thoughts? | Professional Help

---

Starting a Canadian division of your U.S. / foreign employer

I have had a few clients explore the option of opening up a Canadian division for their employer and at least 3 have actually done it as of the writing of this. Two from the U.S. and one from Switzerland. It takes more time, money, and legal support but it works!

Some positives and negatives to this choice:

Positives:

+ With H1B visa challenges being experienced in the U.S. many organizations still find they can recruit people from around the world to work for their company. But instead of bringing them to the U.S. the new employees move to Canada, which offers a much easier pathway to professional work visas. These new employees join the Canadian division you set up and are therefore in the same time zone, can travel to the U.S. easily for meetings, have lower costs of employment (health care), etc.

+ Starting a Canadian division opens up lots of possibilities including you being the "head of the Canadian division", a nice CV addition. For those who choose this option it is very exciting for them because it comes with the feeling of personal and career "growth".

+ Starting a division in Canada keeps you "employed" by the same company.

Negatives:

- There is obviously more cost and work involved in setting up a Canadian division. It does take more time, money, and legal support from outside professionals, too.

- There may be complications for your employer in terms of taxation in their home country. This is manageable but it is usually more complicated for them to have a Canadian division. Smaller U.S./foreign firms may shy away from these extra complications until they understand more fully how it works.

- There is usually an increase in the annual overhead cost to your company.

- Similar to becoming a contractor you wrap up your life fully in the U.S. / foreign country. You no longer work there and cannot normally keep a green card or other country residence visa.

Topic List | Your thoughts? | Professional Help

---

Becoming a contractor

Getting contractor status for a U.S. or foreign organization (or working for more than one) is a very popular choice for Canadians moving back to Canada.

Some positives and negatives to this choice:

Positives:

+ You get to write off ("expense") a nice portion of your home office, vehicle, and other costs, lowering your taxes.

+ You get full access to all financial and government services in Canada because you are a full Canadian resident in all meanings of the word.

+ You have more control of your schedule, work and career choices, money + investments, etc.

+ You have your own business (a sole proprietorship is cheap and easy to set up) which you can use to do "side gigs", add on other clients, test out new business ideas, etc.

Negatives:

- You have more "overhead" in terms of administration of your "business" and your life. This is not a big problem, to be clear, but you do more administrative work. No way around it.

- No employee benefits offered by an organization (but you can pay privately for a third party benefit package.)

- Less security. You are your own business with all the inherent risk that comes with this choice.

- Moving back from the U.S.? You must handle your exit from the U.S. carefully. You are no longer a U.S. employee and therefore normally must "roll over" your 401k to an IRA, close a regular brokerage account, and transition your IRA's, Roth IRA's, etc. to a "parked" status with the U.S. investment management company they are with.

- Moving back from California? There are complications with being a contractor tied to an employer in California. You will need tax and perhaps legal help in this case. Some other U.S. states, many countries, and even some specific industries now have rules and regulations relating to the use of contractors by employers.

- You lose your green card status if returning from the U.S. Other countries? You will mostly likely lose your residence status there, too.

Topic List | Your thoughts? | Professional Help

---

Becoming an independent professional business

This is a special form of having your own business in that you are "behind" or "inside" a business structure. A partnership of accountants or lawyers is an example. But it doesn't have to be multiple people. It can be just you, an independent professional, running a business such as your own counseling service.

What makes this structure different from being a contractor?

The difference is that you have more than one client. You may have your former employer as one who you do work for 20% of your time (for example) but now you also have other clients.

Some positives and negatives to this choice:

Positives:

+ You are a "free agent". You can work for anyone and any organization you choose to have as part of your client base.

+ Like a contractor you can write off your expenses because you are operating a business.

+ You can build a personal brand as a "professional" or "expert" based on your reputation, word-of-mouth, credentials, and professional profile.

+ Some professionals require the legal protection that a company structure provides. Others just feel safer being behind or inside a legal structure. Being "Jane Doe, CPA" makes them uncomfortable. "Victoria Professional Accounting" feels better to them.

Negatives:

- If you are professionally credentialed in the U.S. or elsewhere this might mean you have to get the legal right to practice in Canada.

- You will have higher time and money costs when setting up your independent professional business, marketing it, managing, and reporting it for tax and business license purposes if you have a physical office, for example, and don't work out of your home virtually.

- You must find clients yourself. You are not a contractor for one organization who was your former employer.

Topic List | Your thoughts? | Professional Help

---

Becoming a service provider

This is where you operate a company that provides services to clients and other companies. Different from the other forms above, your business is now incorporated, offers services, and functions just like any other business. You are an employee of your own company and may have other partner-owners and/or other employees. Starting a tech support firm, digital marketing company, or graphic design business are examples.

Some positives and negatives to this choice:

Positives:

+ You are running a business. You have systems, legal structures, processes, and usually partners and/or staff to help you. You are not a "sole proprietor" and likely share the business risk with others.

+ You have the opportunity to capitalize your business with equity, business loans, and even venture capital perhaps.

+ The business can serve many clients and take on larger contracts as there are more resources available to deliver services. There can be a division of labour for the managing and operating of the organization. In other words, the business has the opportunity to scale up, something that is quite hard to do when you are an independent professional working alone.

+ The business may have an office in which clients and customers can meet with you, employees can work together, and administration can be done.

Negatives:

- Obviously, the cost of running a business is higher and you will need more capital to get it started. You may have an office and will therefore have more overhead in terms of rental costs, utilities, government taxes, government reporting, etc.

- You have less freedom than if you were one of the more independent forms of operation, above. You are now working in and for an organization, even if you are the owner or one of the owners.

- A service provider business takes more time and effort to start up and therefore will be slower getting going. Once up-and-running and clients/customers are engaging with you there is momentum but this may take time to initiate and build.

Topic List | Your thoughts? | Professional Help

---

Becoming a consultant / advisor

A consultant / advisor is a special form of business in that you provide expertise but don't work within the core functioning of a client's profession or an organization's operations. Management consultants and technical advisors are examples.

Why is this type of business broken out as separate? Because there can be security, legal, and credentialing constraints that impact your ability to do your work. And typically this kind of work is much higher paid. Expertise is specialized and if your personal services are in demand this results in a very high billing rate. People who have gained expertise over many years and decades tend to gravitate to this role. And those nearer the end of their careers enjoy this role more as they no longer have to do day-to-day work in an organization.

Some positives and negatives to this choice:

Positives:

+ You can typically charge a very high rate for your work. Expect for example $200, $300, $500, or more per hour, depending on the level of your expertise and demand for it. One international tax specialist in Vancouver I know charges CDN $2,500 per hour. He wanted me to refer clients to him. (Aside: This is a rip-off based on other tax experts who charge CDN $400+ per hour and I never refer clients to this person. I don't condone gouging clients just because they are afraid of taxes or anything else. Preying on fear is not cool.)

+ Travel is usually a component of your work, which can be exciting and rewarding.

+ You may have a personal LLC (incorporation) in one or more countries to protect yourself legally and to invoice your clients through.

- You no longer do "work" as an employee, contractor, independent professional, or service provider. You are not part of a team, per se, but instead a "hired gun" expert who others consult with to solve problems or to build something. This can be both rewarding and lonely if you like being part of a team that works together and has a lot of comradery.

- You usually need to engage professional services such as legal, immigration, and tax support to help you with your contractual obligations, ability to do your work internationally, and manage your multi-jurisdiction income and tax picture.

Topic List | Your thoughts? | Professional Help

---

Logistics: Getting paid, invoicing, banking, currencies, taxes

This is a very complex topic and for the sake of simplicity I will start with a common scenario and illustrate how it can be handled. Later I will respond to some common concerns in each of these logistics areas. It is important to note that each person's context has its own unique mix of variables and so you must take stock of yours and apply this guidance carefully to your situation.

Scenario:

Jane is moving back to Vancouver, BC from San Francisco, CA where she has worked in a young tech firm for a few years in a marketing position. Her employer does not have a Canadian division. They are happy with her to continue working for them from Canada as her work can be done remotely. However, being a smaller firm they do not have the HR, logistics, or legal understanding of how she can remain an employee. And knowing that California has complex legal and tax implications to navigate they are understandably wanting to be careful.

In this case here is how this scenario could be handled in more than one way:

• Jane could continue to work in Canada for her U.S. employer if they engage a Professional Employee Organization (PEO) firm in Canada to manage her Canadian legal and tax context. Her employer pays the Canadian PEO firm a monthly fee and Jane continues to work as if nothing has changed except for her geographic location. This is the most simple, legal, and functional way for it to happen. Since Jane does not occupy office space, require expensive U.S. health insurance, or use U.S. benefits her employers net cost may be very low, zero, or even a cost savings as a result of her working in Canada for them.
• Jane's employer might have her move to a new Canadian division and so in effect she would be transferred to working in Canada. This has happened with one of my clients in 2020: There was another employee in their tech firm who also wanted to move back to Vancouver and so a new division of their firm was started in Vancouver for two of their employees. This opened the door to new Canadian employees joining the Canadian division in the future and to hiring from around the world because it is easier at that time for companies to bring international "new hires" into Canada than to the U.S.
  
  The cost of setting up and running a Canadian division is higher, it was more complicated, but in the end it allows a U.S. company to expand its operations, keep their talent (Jane in my scenario), and to potentially attract new talent in a way they might not have been able to do so previously.
• Despite California's complicated contractor laws and regulations, Jane can set up her own independent professional operation and provide services to her former employer. It takes more care with legal and tax considerations but it can work. This option gives Jane more freedom, allows her to invoice her client in USD $ for her work with payment to a U.S. or Canadian bank, write off expenses for Canadian tax purposes, and minimizes the cost and complication inherent to her former employer if she was still an "employee". Jane files her taxes in Canada as an independent professional through a simple and inexpensive Sole Proprietorship or personal LLC corporation (if her situation warrants setting one up).

Which option should Jane and her employer choose?

Great question! There is no "cookie-cutter" answer. It depends on her current employer's wishes, whether Jane wants simplicity or if she is willing and interested in being more independent, and on legal and tax implications inherent to her context. Some people choose to remain a full employee and it works out for all parties. Sometimes a Canadian division already exists or one is created for people to transfer to. And sometimes it feels right and is exciting for a person to become a fully independent professional, allowing them to take on side-gigs or simply to have more control over their time and lives.

How Jane and her firm can find the right answer:

• Consider and discuss together Jane's move to Canada from a strategic perspective: "How can this move to Canada help Jane and help our firm at the same time now and in the future?" Identify the benefits possible for all parties in the short, medium, and long term.
• At the same time identify the costs and complications that Jane's move to Canada raises for both parties. Remember: The simplest and least cost arrangement for any organization is for employees to be geographically local in "cube farms" and working long hours. Thankfully we are collectively evolving out of this mind frame but at the same time there has to be an understanding of the complications inherent in an internationally distributed employee team. For example, in Jane's case she is moving to Vancouver, which is in the same time zone as San Francisco making meetings by Zoom easy. What if she said she was going to be a digital nomad in Estonia, instead, which is 9 hours ahead of San Francisco? How would synchronous meetings be arranged when an employee in San Francisco starting work at 8:00am tries to connect to Jane who is at 5:00pm in Estonia and ready to head to yoga at the end of her day?
• Find out what other individuals and companies are doing. Research how fully remote organizations operate, best practices, and how all stakeholders navigate multiple jurisdiction employees.
• Bring in professionals to help. A lawyer who understands multiple-jurisdiction labour law specific to the company's operating context. An HR consultant who specializes in remote employees and how to lead and manage them. Someone who understands the U.S. / foreign and Canadian cross-border employment and mobility options and considerations. This is the work that I do with clients.

Specific Logistics: Getting paid

As a remote employee you can be paid in the currency of the country your employer is in or in CAD. I have helped clients explore this topic from an income, foreign exchange, and logistics perspective.

Income: One thing to be careful of is the relative value of a currency and the cost of living of the two areas: Where the employer is located and where you will live in Canada. If you were receiving a salary of $100k in USD and living in San Francisco you are likely not living an extravagent lifestyle. When you move to Canada and live in a much less expensive location you might find that if you receive $100k in USD you are not only getting ~$130k in CAD when you convert it but your lifestyle just got cheaper. This means you do really well financially in Canada.

But what if you are moving to Vancouver and your U.S. employer wants to pay you $100k in CAD? Then you will be making $30k less in CAD compared to your previous income and you are now in another high cost-of-living city. This disparity is often a point of negotiation with employers and must be handled carefully.

Foreign exchange: As noted in the point above, the relative value of currencies is important. What if these change? A couple of my clients asked if they should negotiate fixed or floating exchange rate income agreements. Great question and one I worked through with them based on their unique context and time frames. In the face of potential future shifts in the relative value of currencies you have risks either way. Your choice with this question is something to think through carefully.

Logistics: This topic relates to the mechanics of how you will be paid. To a bank account in the U.S. / foreign country? To a Canadian bank account in USD or CAD? And what if you are now a contractor or independent professional? Should you receive your funds from your client(s) in their country or have it sent to Canada? In the case of the U.S. and Canada it really doesn't matter much. Either works well. But many other countries have currency controls and sending and receiving funds is not as easy. If you are in this latter case you will need to understand how the logistics of being paid will work for you.

Specific Logistics: Invoicing & Currencies

I have had this question a few times:

"How do I invoice when I am in Canada and my client(s) are in another country?"

The answer: "It depends on your client(s)."

If you are working as a contractor or other arms-length arrangement with one client - say your former employer - then you can easily discuss this with them. You may invoice them in their currency for simplicity and if it is the USD, for example, you get more CAD for one USD so it is in your interest to do so. And you can very easily receive payments from USD client(s) in Canada via paper cheque, wire transfer, PayPal, or direct payment to a U.S. bank account.

A concern comes up when you have one or more client who is used to you being in their country and they want to continue paying you in their currency. Again if this is USD, no problem. But what if you have clients in Germany, for example? They want to pay in EUR and you are now in Canada. A problem? No. You can invoice them in EUR and have them pay you to a service like Wise (formerly called TransferWise), which has business accounts for receiving payment in multiple currencies. Wise can then convert EUR to CAD at a great exchange rate and you can transfer the CAD from Wise to your bank account in Canada.

In summary, the solution most people choose is to invoice clients in their local currency and have them pay you in a simple way to a bank account you keep in their country or to you via a service like Wise offers.

Specific logistics: Banking

"Can I keep a bank account in the U.S. for getting paid / receiving payment from clients?"

Easy answer: "Yes". Go ahead and keep a bank account in the U.S. if you are going to be receiving payment from your employer or from clients. No problem.

"Can I keep a bank account in the UK / Poland / Thailand / South Africa / etc. for getting paid / receiving payment from clients?"

More complicated answer: If you are going to be paid from these places you may or may not be able to keep a bank account in that country and more importantly, may not be able to easily initiate transfers to your Canadian bank while you are living in Canada. In this case it is better to get paid to a Wise account (service noted above) or by them wire-transferring you the funds directly to your Canadian bank account. Be sure to understand the banking context of the country your client(s) is in, any currency controls they have, and how easy it is to electronically transfer money to you from there.

Specific logistics: Taxes

First, the most common situation: You are moving back from the U.S.: (see all other countries situation below)

"How do taxes work between the U.S. and Canada when I am working for an employer there or billing clients who pay me from there?"

The simple answer - no double taxation: Canada and the U.S. have a tax treaty that protects you from double taxation and makes things much easier than working between Canada and other countries. You only pay tax in the country (Canada or the U.S.) in which you are resident for tax purposes. So if you are living in Canada then this is your primary tax domicile and Canada receives taxes from you. Anything that might be deducted on the U.S. side receives a tax credit on your Canadian tax return. You may still need to do some tax filings annually in the U.S. but you will not be double taxed.

The longer answer with logistics:

When you work for a U.S. employer but live in Canada there are significant actions that your U.S employer legally needs to take, or if they choose to do so, delegate to a PEO firm to do. Or your employer must change your status to self employed (1099 employee) or a contractor if necessary. The Canada U.S. Totalization Agreement gives more detail on how Social Security between the two countries works as well. You may wish to get the support of an experienced and high integrity cross-border tax accountant to help you create the best setup for your specific situation.

I received the following from a great cross-border tax accountant in 2023 for a mutual client of ours, quoted here to illustrate options and to show that you need to be careful setting this up:

So how do we ensure we are compliant?

1. The US employer should cease withholding of US Income and Social Security taxes (there are forms for this)
2. The US employer should register with the CRA and begin withholding and remitting Canadian source deductions.
3. If _______ were to work in a Hybrid model, ideally some US/State taxes would be withheld and remitted if the US work days are significant.
4. The US employer would issue _______ a T4 for the work performed in Canada evidencing the income and social security taxes withheld and a W2 for the income taxes.

Sounds daunting and my experience is most US employers do not want to do step 2. So, if not, what then?

1. ______ could receive the full gross pay and remit the source deductions required to the CRA on the company's behalf. A hassle to ______ and the company would still have to register.
2. ______ could be transitioned to a 1099 employee (self employed). This often results in the loss of benefits but simplifies everything else. That said, I have seen some undertake this and still be eligible for benefits.
3. ______ could transition to a payroll with a Canadian PEO (professional employer organization). This results in you “technically” being an employee of the PEO but for all intents and purposes you still work for the US employer and can enjoy the fringe benefits you have. There is a cost for this obviously which should be investigated if this route is chosen.
4. ______ could have the US withholdings cease and elect to pay the CPP with his Canadian return. 2 issues here: i) the employer is technically supposed to remit and could face penalties for lack of remittance ii) you can’t elect to pay Employment Insurance on your personal return.

Paul’s write up is wonderful at explaining all these options [this resource page].

What I see most of the time is option 2 frankly.

International: You are moving back to Canada from any other country in the world than the U.S. "How do taxes work between ______[country] and Canada?"

More complicated answer: The specific country you will be leaving and billing an employer or clients from has their own tax laws and may have a simple tax treaty with Canada or no tax treaty at all. In this case I recommend being very careful to understand the tax context of the place your employer or client(s) are in. An international tax professional in that country is a person you want to consult with before you leave and move back to Canada so you understand the tax implications of living in Canada and getting paid / billing clients from Canada.

Tax FAQ's:

Q. "I heard from my friend that if I have only one client then the Canadian government will deem me to be an employee! I am a contractor for a _______[country] company and don't want this to happen to me!"

A. There is a mix of truth in this and muddied information. Your friend likely heard this online (or worse on social media) and like all tax horror stories the context is never shared. Just the "pain" part of the story. In the case that you are a contractor working for a Canadian client and you meet certain conditions as set out by the Canadian government then you may be deemed an employee.

If your single client is in the U.S.? Yes, it is likely that you will be deemed an employee of a U.S. company if they are your only client. The U.S./Canada tax treaty makes clear that you then are an employee, not a contractor, and must pay taxes in Canada as a U.S. employee living in Canada.

How about to the UK, Poland, or Thailand (for example)?

This is a completely different situation. You are claiming business income from international sources that have nothing to do with a client or employer in Canada or in the U.S. I have to be careful to note that it is important that you are actually an arms-length contractor or other form of business service provider to your international client(s).

In summary: Context and how you set up your arrangement to your client(s) are key to understanding the often-shared fear stories out there. If you are an actual employee or employee-like worker of a U.S. or foreign organization living full-time in Canada? You must set up as an employee in Canada. If you provide professional services to multiple clients in an arms-length arrangement you have a stronger case for not being considered a U.S. or foreign employee living in Canada.

Q. "I heard that if I become a contractor, independent professional, or consultant / advisor I will have lots of work to do in bookkeeping, accounting, and taxes and if I am not careful the Canada Revenue Agency will audit me and make me pay fines and..."

A. No. Running your own independent professional business does not create onerous bookkeeping, accounting, or tax issues. You will not be overburdened with administrative work when you really want to be working on and in your business. And in today's modern world you have access to wonderful tools for invoicing, payments, bookkeeping, accounting, and taxes. From PayPal for invoices and payments to TurboTax/UFile for doing your taxes. And you can hire help for the taxes, too, which might cost you only a few hundred dollars per year. Not a big deal!

Q. "Do I need a Canadian GST number and charge my client(s) in the U.S / abroad GST?!"

A. GST is charged on Canadian sources of business revenue only, not on U.S. / foreign sources, which are "zero rated", which means you charge them zero GST. And if you will make less than CDN $30,000 from Canadian sources you do not collect GST in Canada either.

However, registering for a GST number (HST in many provinces) still seems to be required. Simple to do, so get it done.

Topic List | Your thoughts? | Professional Help

---

Professionals in Canada who can help

Depending on your context and plans for setting yourself up to work in Canada for a U.S. / foreign employer or client(s) professional support may not be needed or may be essential. Here are some professionals who can help, based on your context and plans:

Context: You will become an independent professional serving more than one client outside of Canada but making less than CDN $100k a year in billings

In this case you can set up a simple "Sole Proprietorship" legal structure. No professional help is needed to set this up. You set up your simple business structure online in the province you will be living in through your province's government web site. You may need an accountant to help with your first tax return in Canada but otherwise, it is very simple to operate your business this way.

If operating independently is brand new to you and you would like support in setting up the marketing, logistics, online presence, and financial (invoicing, payment, banking, taxes) aspects then I can help. Not only do I operate this way myself but as an international business professor I gained 25 years of expertise and experience doing so.

Please contact me and let me know your context and plans so I can determine if I am the best person to help.

Context: You will be a full employee of a U.S. or foreign organization working in Canada.

In this case a PEO firm is usually the way to go. A growing number of firms are using a modern and professional world-wide remote employee HR support company called "Remote":



Remote.com

---

A more local and Canada-specific PEO firm serving employees of U.S. / foreign organizations who are living in any province in Canada is PEO Canada:

Marie Melino - PEO Canada Employee Management
Ph: 647-327-3555
PEO Canada

Context: You will move to legal "contractor" status for your past employer and/or will become a contractor to more than one client.

In this case the key person to help you set up your professional relationships with your client(s) is an experienced cross-border tax accountant (U.S. client/Canada) or an international tax accountant (foreign country client/Canada). Here are several excellent accountants who can help:

Cross-border and International Tax Accountants

Context: You will set up a division of your organization in Canada, will be operating a service provider business, or will be setting up an LLC as a highly paid consultant / advisor

In this case a lawyer who is well versed in cross-border business arrangements, tax law, and who has experience setting up business structures is advisable. One who can help who is very well respected for his expertise and is great to work with:

Michael Cirone - Dual-licensed business and tax law (Canada + USA)
Ph: 647-748-9797
Michael Cirone

Topic List | Your thoughts? | Professional Help

---

Other Resources

Here are some resource sites and links that can helpful, grouped by type:

Registering your business name (Sole Proprietorship / personal LLC)

For setting yourself up as a contractor, independent professional, service business, or consultant / advisor:

• British Columbia: BC OneStop Business Registry. BC makes it simple and easy to set up your own small business legal structure through this one portal.
• Ontario: Service Ontario Business Services. Registering a business name and related services. You can also get a private firm to help you set up your business name and structure in Ontario. You may or may not need this support.
• Other provinces? Just Google "__________[province] business registration" to find the appropriate provincial government web site.

General resources for working independently in Canada

Note: As you read information on the internet about becoming an independent professional in one of the legal forms noted in this resource you will hear fear-inducing claims, "facts", and horror stories. Please be careful with these. Usually they are told without an appropriate context, often shared as "fear porn" to make someone feel better about their own mistakes, and sometimes shared by an "expert" to make you scared so you will hire them. Whenever you read or hear something like this I recommend stepping back and being careful to find out the truth about the topic as it is applies to your specific context.

Please share any excellent online resources you find very useful and I will add them here. Thank you!

Topic List | Your thoughts? | Professional Help

---

Your ideas, considerations, and experiences?

Please share your thoughts, considerations, experiences, and wisdom relating to returning to Canada and continuing to work as an employee, contractor, or as your own business. I will post them here as help for others. Along with a credit to you will be a big thank you on behalf of the many people you will be helping!

Thank you!

Paul Kurucz

Latest update to this page: November 2023

Topic List | Your thoughts? | Professional Help

---

I offer professional support to help you prepare for a smooth and easy return to Canada so you can feel confident and organized!

Your questions about when to move back, taxes, investments and finances, bringing back your household belongings, health care, and more will be answered promptly and professionally, with resources to back up what you need. My 20 years of supporting over 1,300 clients gives me a depth of expertise across all aspects of planning and returning to Canada.

Paul Kurucz - Canada

A happy client:

Hi Paul,

Just to update you - we landed and sailed through customs! So thank you so much for all of your advice...It was a thoroughly pleasant experience.

This is to say thank you for everything. Your advisory has been so incredibly helpful and saved us considerable time and removed room for error.

With best wishes,

Caroline

Paul's professional support

---

Moving Back to Canada Planner!

A ready-made and up-to-date planner of questions, considerations, and actions to take as you prepare for your move back to Canada, organized on a timeline approach. Save hours of work and stress of trying to piece everything together. A companion tool to the full content on this web site.

Now available for immediate download. In easily editable Microsoft Word format so you can customize it to meet your planning needs. Also in PDF format.

NEW! If you are in the U.S. and moving back to Canada quickly your purchase includes a new edition as well: "Moving back to Canada from the U.S. in 30 days or less", in Word and PDF formats.

Testimonials: "Your moving guides and checklists are unbelievably helpful - frankly I don't know what I would do without them. You have covered everything including many, many things I would not have thought of. Thank you!!!" - C.W. April 2022. "The list of tasks is very helpful as I’m a list person. Just love checking off the boxes!" and "I must say I truly appreciate having purchased your guide to moving back to Canada. While we are still a couple months away it has really helped me keep all the "balls in the air".

Bonus #1 ! Includes the guide: "Canada in 2024: 10 Insights to Empower Your New Life in Canada." Written by Paul Kurucz from his experience helping over 1,500 clients return to Canada, this guide will help you better understand the Canada you are coming back to!

Bonus #2 ! Includes the "Real Estate Selling and Moving Checklist" to help you prepare for your move back to Canada if you will be selling your house, townhouse, or condominium!

Purchase and Download now:

(PayPal, Visa, Mastercard, Amex)

---

Home | FAQ's | Contact | Get help - Professional Support

Commercial use: © 2003-2024 by Paul Kurucz.

Content from the Moving Back To Canada web site by Paul Kurucz is licensed under a Creative Commons Attribution 3.0 Unported License for non-commercial, personal use.