Employment & HR in Canada

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Planning to break new grounds with your newly acquired MBA degree. So, ready with your futuristic business idea? Superb! With the decision of launching a venture, you are setting a foot into the world of incredible opportunities, growth, and not to miss challenges. Starting a business surely is no breeze. It takes commitment, dedication, diligence along with awareness. 

If Canada has lately piqued your interest in locating your venture, then you are at the right place. We shall walk you through the process of starting a business in Canada, the requirements, formalities, and all the things you need to know. Canada is a neighbor of the United States that premises remarkable perks of setting up a business in the country apart while allowing opportunities to expand into other parts of the globe. 

Thanks to Canada’s investor protection, trade freedom, lowest red tape, low corruption, low corporate taxes, etc., it gained the top position in 2011 Forbes’ Best Countries for Business List, while it ranked 6th in 2018. Canada is the ninth-largest economy worldwide, with a GDP value of $1.64 trillion.

The stable economy and business-friendly environment of the country make it a great choice for foreigners to launch a business. Furthermore, you will get your hand on one of the world’s most skilled workforce in Canada to serve your business. If you aspire to mushroom your business on a global scale, Canada is the best, without a doubt. 

Before you head straight for instituting a venture in the country, you need to get acquainted with the legal obligations, procedures, formalities, etc. For instance, to kick off a business, you should estimate the profitability of your business idea, measure the market size, prepare a business, register for HST/ GST, register for PST (Provincial Sales Tax), and select the legal structure of the business, and more.

So, you now have an idea of what it takes to establish a business in Canada. Seems fairly cumbrous, right? Nonetheless, with the right guidance, assistance, and adherence to legal regulations, you accomplish it with relative ease. 

Quick Overview

Starting a business anywhere is adventurous, challenging, and rewarding. However, if the economy of the land where you desire to erect your business is marvelous, multi-cultural, and delivers stupendous business opportunities and more, you can’t wait any further.

That’s the case with Canada. Its stable and flourishing economy, premium education system, conducive business environment, robust banking system, political stability, and excellent international reputation in business and education render it an irresistible option for entrepreneurs and investors alike. 

Establishing a business in Canada may seem overwhelming, but the staff and regulations streamline the whole process. You need to develop a profitable business idea, craft a business plan, register your business, pick an impactful name, get a business license, consider Provincial Sales Tax, choose a business ownership structure, and open a business bank account.

You can glide through each of the processes easier by taking the help of authorities, abiding by the legal obligations, and fulfilling the requirements to start a business in Canada. You surely can’t expect these matters to be duck soup. You will need to earn it, and this guide can help you loads. We shall parse through every detail and information you need to know about starting a business in Canada. 

Process of setting up a business in Canada

To start a business in Canada, you must go through certain steps and processes and fulfill certain formalities. Here is an ultimate guide to help you reify your dream of establishing a full-blown venture. Let’s get going: –

  • Conceive a good business idea: You cannot simply carry out other steps of launching a business without coming up with a good business idea. That’s what will drive you to work, invest, and grow. To check the marketability and profitability of a business idea, you need to monitor the current trends, peruse your skills, and add some uniqueness to the existing concepts. Now, you should consider testing the idea’s viability before you set to invest your resources, time, money, and energy.
  • Prepare an elaborate business plan: Preparing a business plan helps you understand the marketability of your idea. T write a business plan; you would be scrutinizing all things about products, market size, industry, competitiveness, challenges, gains, etc. Furthermore, lenders and people who wish to associate with your company also ask for a business plan, so they can estimate the power of your idea.
  • Pick a dynamic business name: Your business name should reflect your core values. Moreover, it should be fascinating, memorable, and communicate the sense of your business. A business name is required not only for marketing purposes but for legal purposes too. There are legal issues that a business owner has to confront when naming a business, as the government imposes more naming restrictions on corporations as opposed to sole proprietorships.
  • Select a form of business ownership: Canada offers three forms of business ownership, namely, the partnership, the sole proprietorship, and the corporation. These categories are further divided into subcategories, for instance, limited partnership, cooperative cooperation, etc. The option you choose for your business depends on many factors, like a liability to tax deductions for a business.
  • Procure a business license: Although not mandatory for all businesses, most newly launched ventures need to grab business licenses to operate legally within the jurisdiction. The kind of permits and licenses your business needs are determined by the kind of business you plan to start.
  • Consider GST/ HST registration: Registration for GST (Goods & Service Tax) & Harmonized Sales tax (HST) is necessary for businesses whose gross income is $30,000 or above for four quarters consecutively. Even if the income is not touching the stipulated threshold, registering GST/ HST can be seen as important due to Input Tax Credits, which is a way of having back the HST or GST your business reimbursed on business purchases.
  • If required, register for Provincial Sales Tax: If you are starting a business in Alberto, Canada, or in British Columbia, Saskatchewan, or Manitoba, your business will need to register for PST (Provincial Sales Tax). If in Quebec, Quebec Sales tax registration is necessary. In contrast, you need to register your business to collect and pay the right provincial tax in other provinces that haven’t synchronized the sales taxes with GST.
  • Hiring Employees: Now, you will have to hire employees to operate as a functional business. Before hiring people, make sure to have insurance coverage and legal coverage for recruiting the workforce. This comprises worker’s compensation insurance, employment insurance, and management of payroll deductions. If you are unaware of the prevailing labor laws in Canada, then hiring an expert HR consultant like Zimyo could be the ideal solution you are looking for.
  • Get additional business insurance: Apart from employment insurance, a business required extra protection. Several insurance policies cover business interruption, disability, key people, and general liability. Before choosing a pla
    n, you may want to discuss it with a reliable insurance service provider and go for the one that suits your business requirements.
  • Promote & Market your business: After all the hard work you have put into launching your venture, you need to promote your business. You must have prepared a smart marketing strategy while creating a business plan, and now you readily implement it to get your business off the ground. It is not necessary to go by the exact things you planned. You may tweak and optimize the plan to accomplish higher business goals. 

Hiring Employees in Canada 

With a population of more than 64% of people lying between 25 to 34 years of acquired education, Canada leads the world in the adult population having tertiary education. So, with skilled foreign nationals in Canada, you will enjoy a greatly competent native workforce in the country. However, you need to know certain things about hiring employees, their leaves, and other related information before recruiting them as a responsible employer. So, read on!

  • Trial Period/Probation Period: Probationary period is when the employer tests the skills and abilities of the employee to see if they are a fit for the role and company. Employers must mention the duration of the probationary period. However, it shouldn’t influence any prison under the Employment Standards Code or the Notice Period.
    Under the Employment Standard Code, the first 29 days of employment would be considered a probationary period. During this period, either party involved in the employment contract shall have the liberty to terminate the services without prior notice. In case the employee has served for the company more than 29 days, they must be notified of termination in advance. 
  • Leave and Holidays: The majority of the employees in Canada are entitled to a paid public holiday. If a public holiday falls on a day that would typically be a workday for the employee, and the employee has not taken off that day, it is upon the employer to allow paid leave.
    Employees with employment for less than 5 years should receive 2 weeks of vacation time, while those with 5 or more than 5 years of employment are entitled to 3 weeks of vacation time annually. A vacation entitlement year involves the time spent by an employee away from work due to: –
  1. Injury/sickness
  2. Layoff
  3. Other approved leaves
  4. Declared emergency, pregnancy, parental, reservist, child demise, sexual or domestic violence, organ donor; critical illness, family medical, or crime-related child disappearance leaves. 
  • Maternity Leave: Canada Labour Codes entitle female employees, including professionals and managers who have been employed for 6 months consecutively in a company, to get up to 17 weeks of paid maternity leave. The total span of maternity leave shall not exceed 78 weeks in any case. The 17-week maternity leave initiates any day 13 weeks before the delivery date and 17 weeks after the childbirth.

To avail oneself of the maternity leave, an employee must provide her with an authentic medical certificate confirming her pregnancy. Furthermore, employees must notify in writing at least 4 weeks before starting the maternity leave. On top of this, the notice should also clarify the duration of leave intended. Once back to work, the employee is entitled to her former position with the same wages and perks.

  • Termination of Services: The employment contract can be terminated if the grounds of termination are valid, the other party is notified, and gets to exercise applicable legislative rights. Furthermore, in the case of individual dismissal, the statutory period spans about 1 to 8 weeks of notice corresponding to a person’s service in the company. Employees hired under a definite term contract are not authorized to get reasonable notice.

In the cases of mass termination where 50 or more than 50 employees are to be terminated at once should be done within 4 weeks at the employer’s establishment. In certain, multiple locations might be considered for the purpose. The notice period won’t be valid until relevant government official bodies haven’t been notified about the terminations.

Furthermore, if any of the stipulations mentioned in the employment contract is violated, the employer can dismiss the person without prior notice. Such a dismissal can be done in the following scenarios:

  1. Fraud, theft, criminal activity
  2. Workplace harassment, significant dishonesty
  3. Maybe dismissed for poor performance (with just cause)
  • Pension: To enjoy the benefits of the Canada Pension Plan (CPP) retirement pension, a person must be a minimum of 60 years of age and have made a minimum of 1 valid contribution to the Canada Pension Plan (CPP). Furthermore, you need to consider applying to CPP to receive the pension in advance.

    Average lifetime earnings through the work-life and the age to initiate a CPP pension and contributions to the CPP determine the amount you will receive every month. The standard age for initiating the pension is set at 65. However, a person can have it as he or she turns 60 or even at 70.  

  • Work Hour Norms: Maximum work hours have been set by most jurisdictions for employees. In Canada, employees cannot work more than 8 hours a day, 40 to 48 hours per week. However, in case of overtime, in certain conditions, daily or weekly work hours could be increased given that they are paid, the situation is urgent, and employees agree to work.

Typically, the time during which an employee is not working while at the workplace would be included in the work hours. However, taking the time for following and he /she is also entitled to as well while staying at the workplace won’t be included in the work hours:

  1. Engage in private pursuits or affairs.
  2. Eating break
  3. Sleeping (employee is entitled to sleep after a minimum of 6 hours of continuous work)

How easy is it to conduct business in Canada?

Canada has been ranked 23rd while given a score of 79.6 out of 100 in the Ease of Doing Business index by the Doing Business, which compares economies of the world to estimate the ease, they provide in starting a business. The Doing Business considers 190 countries, where the top 20 make the best choice for launching a venture.

So, you can see how Canada is all set with its bles
sings and favors to support your business from its inception to taking it to great heights. Now, we shall discuss each element perused by the Doing Business to assign the 23rd position to Canada. Let’s parse through!

  • Starting a Business: Starting a Business indicator evaluates the ease, cost, number of procedures, and time involved in starting and finalizing the formalities for launching a business. Canada bagged a coveted 3rd position in the subindex, which directly implies its conducive business environment. The country further streamlined the registration process into just one procedure that could be accomplished online. 
  • Managing Permits: In the subindex of permit management, the country came at the 64th position. This factor involves looking into the number of processes, cost, resources, and time it takes to finish all the formalities.

    On top of this, it also includes safety mechanisms and considerations in the construction, allowing system and quality control. Canada made construction permit management more expensive as it raised the fees for building permits and site plan sanctions

  • Getting Electricity: You can’t run your business without reliable electric power. That’s what the Getting Electricity subindex looks into. The Doing Business report peruses the time, cost, and procedures involved in getting an electricity connection for a business. Canada got 124th rank among other 189 countries while its score remained at 63.8 out of 100 for this EODB indicator.

    Canada has made securing an electricity connection easier by lowering the time required for external connection tasks. Electric power supply in Canada is quite reliable where the frequency and duration of outages per customer every year is just 2. 

  • Getting Credit: This is another indicator considered by the Doing Business to estimate the strength and efficiency of credit information systems and movable collateral laws. Furthermore, it also assesses the time, number of procedures, and costs involved in getting credit for a business in the country. Canada has been conferred 15th rank and 85.0 scores out of 100 in the Getting Credit subindex. 
  • Managing Payroll: To manage the payroll, employee leaves, and related elements, you need to integrate a productive and reliable payroll management system. Doing this will ensure appropriate monitoring of wages, leaves, expenses, and income of the company and assist you in adherence to related laws.

    There are countless HR and payroll management services available in Canada. You need to know what payroll tax in Canada, among other related things, is. With Zimyo payroll management services, all your worries are taken care of.

  • Paying Taxes: In the subindex of Paying Taxes considered by the Doing Business report, Canada ranked 19 and scored 88.1 out of 100. To measure the position of an economy for this indicator, the Doing Business checks the time, several procedures, costs, and other formalities involved in filing and settling a tax.

    It also regards the ease of post-filing procedures, costs, and time. Canada made tax payments less expensive by reducing the general corporate income tax rate, adopting accelerated depreciation for diverse assets, and lowering the GST & small business tax rates. It is necessary for starting a small business in Canada. 

  • Enforcing Contracts: Enforcing Contracts involves time, number of processes, recovery rate, costs, and formalities involved in settling a legal dispute. On top of that, Doing Business also looks at the efficiency and authority of the judicial system and its laws to reach the right verdict. Canada scored 57.1 out of 100 while gaining the 100th position. The efficiency of the procedures was simplified in Canada by introducing an online document submission process. Furthermore, the plaintiffs could pay court fees and file the initial grievance online.
  • Resolving Insolvency: Canada grabbed 13th rank and scored 81.0 in the Resolving Insolvency subindex. Doing business takes time, cost, recovery rate, and formalities involved in resolving commercial insolvency in a particular country; as far as the strength of Canada’s insolvency framework is concerned, the country scored 11.

So far, you have understood all aspects of how to start up a business in Canada, the formalities, and the legal obligations one needs to follow when launching a business there. Indeed, the country flaunts a universe of opportunities in its highly business enabling environment apart from its wide-open spaces, trees, mountains, lakes, and natural beauty! 

Zimyo is a leading HR and Payroll management services provider in Canada with multiple years of experience. The company helps businesses hire the best talent and takes care of the financial requirements of employees, such as advances or credit for a hassle-free work experience.