How U.S. Companies Hire in Canada

U.S. companies hire in Canada in one of three ways: through an employer of record (no Canadian entity, with hires starting in 24–48 hours), by forming a Canadian entity (3–6 months and fixed overhead, usually worth it at 50+ employees), or by engaging independent contractors for genuinely independent work.

Published November 22, 2025 · Updated November 6, 2026

Three ways to hire in Canada: an Employer of Record, your own entity, or a contractor

Can a U.S. company hire a Canadian employee?

Yes. A U.S. company can hire a Canadian employee without opening a Canadian company, as long as the person is entitled to work in Canada. Someone must act as the employer there: registered with the CRA, withholding income tax, CPP and EI, and following provincial employment standards. That can be the U.S. company itself or an employer of record.

Employing the person directly means a CRA business number and payroll account, workers' compensation registration in their province, and a calendar of remittance and year-end deadlines: see the CRA requirements checklist. Through an employer of record, those accounts and filings belong to the EOR, and you direct the work.

Three ways to hire in Canada

Each has different requirements, costs, and timelines.

  • Employer of Record (EOR)

    Best for: Most U.S. companies, especially those hiring 1–50 employees

    • No Canadian entity required
    • Onboarding in 24–48 hours
    • Compliance handled by the EOR
    • Lower upfront costs
    • Easy to scale up or down
    How our employer of record works

  • Form a Canadian entity

    Best for: Companies with 50+ employees and a long-term presence

    • Requires a Canadian corporation
    • 3–6 months to set up
    • Higher upfront costs ($5,000–$15,000+)
    • Compliance managed internally
    • Full control and ownership
    Compare EOR vs entity

  • Independent contractors

    Best for: Genuinely independent, project-based work

    • No entity required
    • Fast engagement
    • Lower compliance burden
    • Less control over how work is done
    • Higher misclassification risk
    Compare employee vs contractor

The hiring process, step by step

  1. Choose your approach

    Employer of record, your own entity, or contractors, based on your needs, timeline, and budget.

  2. Set up compliance

    With an EOR, the setup is done for you. With an entity, you register with the CRA and provincial authorities.

  3. Onboard your team

    Employment contracts, documentation, and payroll setup. Through an EOR this typically takes 24–48 hours.

  4. Run ongoing operations

    Payroll, tax remittances, and compliance every pay cycle; with an EOR, all managed for you.

Key requirements for hiring in Canada

  • Tax and payroll

    Canadian employers must deduct and remit:

    • Federal and provincial income tax
    • Canada Pension Plan (CPP) contributions
    • Employment Insurance (EI) premiums
    • Québec variations (QPP, QPIP)
    Canadian payroll guide

  • Employment law

    Compliance with provincial employment standards:

    • Minimum wage
    • Vacation and statutory holidays
    • Termination notice and severance
    • Workplace safety (WSIB, CNESST, and others)
    Employment law basics

  • CRA registration

    If you employ people directly, you need:

    • A Business Number (BN)
    • A payroll account
    • GST/HST registration, if your sales require it
    • Ongoing remittance compliance
    CRA requirements

Why most U.S. companies start with an employer of record

  • Speed

    Hire in 24–48 hours instead of the 3–6 months it takes to form an entity.

  • Cost

    Lower upfront costs and a predictable monthly fee.

  • Compliance

    Employer obligations handled by specialists, reducing your risk.

  • Flexibility

    Scale up or down as your needs change, without fixed overhead.

Sources

InfraDev's team reviews this page twice a year and when a rule it describes changes. General information, not legal or tax advice. How we review our guides · Report an error

Ready to start hiring in Canada?

Our Canadian employer of record makes it simple, fast, and compliant. Tell us about the role on a short call.

Book a 15-minute call