Working Remotely From Canada for US company

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guyOntarioMer
Posts: 5
Joined: Thu May 23, 2019 5:27 pm

Working Remotely From Canada for US company

Post by guyOntarioMer »

Hey,

I have been offered to work remotely for a US-based startup for 87k/year + stock options. They want me to work as an independent contractor, to incorporate and made clear they don't want to create or go through a Canadian entity.

So far, my understanding:
1- The company does not want to deal with their obligations as an employer, make all payroll deductions and issue a proper T4. If I touched on the matter with the company, I guess the deal will be off; they will move on to somebody else (I am currently unemployed)
2- CRA will see the relationship as an employer/employee agreement and not a business to a business one, despite this "contractor" title.
3- It is technically not "legal" to work as an employee da for a foreign entity without any local presence.
If I go along with all of it like the OP, it means that I will be responsible for paying the fines and the employee AND employer portions of EI + CPP, etc. to the CRA.
4- I would have to sign a W-8Ben form and send it to the US company so that it won't have to withhold 40% when paying me.

Am I right so far?

If I accept, will I be able to write off my work-related expenses?

Is it still worth it/still a good deal, even if it means that I will have to pay all employer portions + maybe fine as well?

What is the best way to collect payments from them?

I am pretty sure a lot of workers in the software industry (I am software developer) work in similar arrangements, what are the strategies they use to be seen as real contractors and not employees?

Any other advice?


I hope this thread would be used as a reference for people in a similar situation.

PS: if somebody knows a good and cheap CPA in Ontario please PM me.
nelsona
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Location: Nowhere, man

Re: Working Remotely From Canada for US company

Post by nelsona »

You are essentially being asked to work corp-to-corp, which is not a bad thing. You could then draw a salary from YOUR corp. Then you don't have to worry about being considered an employee of this US form. they would simply cut you a check, doesn't matter which currency or wheich bank you put it in. It would not be taxable in US. You might need a W-8 of some form, see W-8 instructions to see which one will apply to your corporation./

The company is correct that it is better/easier not to have to deal with you as a foreign employee, but then they should be rewarding you a little better, since you won't have any benefits (I don't know why they would be offering you options, since you won't be an employee, but that is up to them). You may wish to point this out to them.

YOUR company will be able to write off expenses. YOU can decide how to get paid (wage or dividends) yourself.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
guyOntarioMer
Posts: 5
Joined: Thu May 23, 2019 5:27 pm

Re: Working Remotely From Canada for US company

Post by guyOntarioMer »

nelsona wrote:
> You are essentially being asked to work corp-to-corp, which is not a bad
> thing. You could then draw a salary from YOUR corp. Then you don't have to
> worry about being considered an employee of this US form. they would simply
> cut you a check, doesn't matter which currency or wheich bank you put it
> in. It would not be taxable in US. You might need a W-8 of some form, see
> W-8 instructions to see which one will apply to your corporation./
>
> The company is correct that it is better/easier not to have to deal with
> you as a foreign employee, but then they should be rewarding you a little
> better, since you won't have any benefits (I don't know why they would be
> offering you options, since you won't be an employee, but that is up to
> them). You may wish to point this out to them.
>
> YOUR company will be able to write off expenses. YOU can decide how to get
> paid (wage or dividends) yourself.

Thx, wonderful
but I thought the corp is supposed to have more than one customers?
Also, let say I incorporate next week, what happens if I no longer have clients; Do I have to still pay some taxes even if I don't make any benefits for a year or two?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Working Remotely From Canada for US company

Post by nelsona »

I believe you might be confusing incorporating yourself, with being TREATED by CRA as an contractor or employee. you may wish to talk to a CPA about this.
Other than the cost of incorporating, you will not be taxed unless you make money.
But from the point of view of the US firm, they either want you to incorporate (paid corp-to-corp), or become self-employed (paid on 1099 basis).
That's decision you both can come to: you may wish to incorporate for liability reasons as well as tax benefit.

please don't quote the posts, it just add lines for nothing: We can see what I wrote above.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
guyOntarioMer
Posts: 5
Joined: Thu May 23, 2019 5:27 pm

Re: Working Remotely From Canada for US company

Post by guyOntarioMer »

Thanks.

Personally, I am thinking of incorporating because of liability concern. Now the part about the stock options still do not make sense, can a company give another company stock options? Like you mention I rather get cash than equity but, I am not the one deciding...

I assume it takes time to incorporate and do all the paperwork associated with it.

In your opinion, is it appropriate to start working for the company as self-employed and incorporate later (like in one month) or you recommend to incorporate before actually having found a reliable client?
nelsona
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Location: Nowhere, man

Re: Working Remotely From Canada for US company

Post by nelsona »

Dunno.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
guyOntarioMer
Posts: 5
Joined: Thu May 23, 2019 5:27 pm

Re: Working Remotely From Canada for US company

Post by guyOntarioMer »

Ok
guyOntarioMer
Posts: 5
Joined: Thu May 23, 2019 5:27 pm

Re: Working Remotely From Canada for US company

Post by guyOntarioMer »

nelsona

To answer my question, yes, it is possible to get stock options as an independent contractor. The Non-qualified type of stock options can be granted to the contractor's corporation.

Another question:
f I incorporate federally, do I still have to register provincially, even though I plan only to have foreign customers?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Working Remotely From Canada for US company

Post by nelsona »

Check wioth your province, our your lawyer.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Moving2Canada
Posts: 20
Joined: Thu Jun 25, 2015 12:58 pm

Re: Working Remotely From Canada for US company

Post by Moving2Canada »

I have a similar situation... moving to Canada (Canadian citizen) but will go the self-employed route instead of incorporating, will have 1 U.S. client. The U.S. client is my current employer but I will be transitioning to a contractor roll from Canada.

What IRS form does my US client pay me under? (W8? 1099? Other?)

I need to be specific so that I know how to advise my U.S. pension plan rollover. I am moving from a 401k to ROTH IRA but it depends whether I am in-plan (which I believe I can do under if I am essentially a 1099-employee) or not in-plan, essentially a rollover upon termination of employment.

Thank you.
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