Canadian here, and this checks out.

I think the reason this isn't more popular is that our talent pool is small enough that unless you already have a Canadian presence it's not really worth opening up a business unit/office/whatever here. Obviously some big players have done it (MS, Amazon, EA) but if you're a medium sized company it may not be worth it.

I work for a US company but I'm a contractor for this reason. It works for me but if you don't have extended health through your partner or don't want to deal with the tax implications of being "self employed", it can be less attractive.

> I work for a US company but I'm a contractor for this reason. It works for me but if you don't have extended health through your partner or don't want to deal with the tax implications of being "self employed", it can be less attractive.

It's extremely easy to be self employed in Canada with a foreign corporation. You just start getting your money wired through Wise or whatever service and declare it on your income taxes. As you work for a foreign corporation, no need to charge sales tax. That's it, no separate entity or incorporation needed. You can still expense your tools expenses, part of your housing, etc.

Sure if you want to incorporate, it becomes more complicated. But you wouldn't be incorporated either if you had a salaried job for a tech company locally.

I'm aware.. as I said I currently contract.

But "extremely easy" is relative. It's still more hassle than being a salaried employee. If you make a non-trivial amount of money you'll need to pay your income taxes in installments and set it aside yourself (no deductions after all). You need to pay 100% of your CPP contributions. You're likely getting paid in non Canadian currency so need to get set up with a good forex provider or get ripped off by your bank (I use xe, but there's a few out there).

Also your point about not needing to charge sales tax depends on what country your employer is in. In my case it's true I don't need to charge because we have a tax treaty with the USA; for other nations this may not be the case. If no tax treaty is present, you need a GST registration #, charge your employer said GST, hold it yourself and then pay it out just like your income tax.

Also the extended health can't be overstated. If you have dental issues, bad eyesight, are on prescription drugs etc. it can make a real difference.

Generally I'd recommend contracting to people but I just want to be realistic.. it has it's downsides.

Yep I had a job offer fall through after several months of verbal offering & negotiation because the company was acquired and the new parent company had logistical problems hiring Canadians. Though mostly due to their own incompetence, it sounds like (their employer of record situation was charging insane overhead for Canadians).

So I'm also working as a contractor for a US (well, international remote but US incorporation I guess) company right now. And, yeah, no benefits isn't great. But I have also found that paying out of pocket for dental, etc. is better than buying a plan for myself.

Also a bit of a bummer that CRA has tightened up incorporation stuff a bit since the last time I did this. Given I have a single client only right now, I'll just be doing sole proprietorship.

> And, yeah, no benefits isn't great. But I have also found that paying out of pocket for dental, etc. is better than buying a plan for myself.

The idea is you scale your rate to include enough for a benefits package.

Or they use a POE/EOR service, that's possible in Canada I think.

Either way, incorporation still has some advantages, one being that you time shift your pay as needed. It can make it easier to subcontract people too. And it's easy, and only costs a few hundred dollars.

CRA will screw you if you incorporate and only have one client.

My employer is using Deel, paying me as sole proprietor, and that's fine. Deel can also act as an EOR and I could be "full time", and that could offer benefits. But it feels like a bit of a veneer overtop over what feels like contracting anyways, and it would mean less $$ in my pocket. It doesn't make a lot of sense.

Especially now that pharmaceuticals in Ontario are free for kids whose parents don't have a plan.

Also, it seems that telling my dentist and physiotherapist that I don't have a plan seems to make them behave more responsibly, on the whole.

If I end up at some point landing more clients and I end up being more consultant than single-client contractor, then I will incorporate.

As I understand it, it's not really about the 1 client, so much as about demonstrating you aren't really an employee-employer relationship masquerading as something else. It sounds like that's what you actually are, so in that case you shouldn't be incorporating. If you change contracts often enough it might make more sense.

FWIW an EOR/POE is more about the convenience for the employer, not you - they don't have to establish a local business presence, register a bunch of tax accounts, etc. You can end up technically employed by the EOR with access to a decent benefits plan etc., and paid directly by payroll. At least that's how it works in some jurisdictions, as you note. It's different all over, but can make a huge difference in somewhere with crappy medical coverage, or other benefits you want to keep consistent.

As a Canadian PR I've always thought this would be a good option except that the Canadian government seems determined to make it difficult.

When the most practical option is to form a corporate entity with a single employee, and BTW you may have to pay GST + PST on labor depending on if other Canadians use the service, it begins to look really unappetizing.

I get that employees as contractor relationships are rife for abuse, but, like so is exempting tech employees from overtime protection (BC and Ontario).

It really just shouldn't be this hard to do work for a company that isn't in Canada.

CRA now frowns heavily on "personal service corporations." There is no tax advantage (in fact there's disadvantages) to incorporating unless you have more than one client.

So it ends up being sole proprietorship only, which has far less tax advantages.

I mean, as a tax payer and citizen who paid exorbitant personal income taxes for years as an employee of a FAANG, I think this is probably equitable. But as a contractor, now... damn I'd like to be able to take advantage of corporate tax rates like I could 13 years ago when I did this last.

I’m not even talking about tax advantages, just the amount of regulatory overhead and paperwork and general BS just needed to sell your services

It's what we ended up doing (indirectly through an acquisition). But it didn't end-up costing less in the long run. I'd say about a third of employees ended up coming to the Bay anyways during the first year.

Something you have to keep in mind is that there are two parallel markets over there: SV caliber developers and the rest. The former won't have any issue getting a job in the US (takes maybe a week for a talented engineer to get one). Therefore, comp has to be priced appropriately. The later can't -and likely won't ever be able to- secure a US visa, mostly due to skills (there's a reason they immigrated to Canada, it's way easier and the quotas are close to 10x per capita compared to the US). Some companies leverage this and have floors of international devs they park in Canada for a fraction of their US counterpart through a subsidiary.

I'd say there's three segments TBH.

The "SV caliber" developers you identify [honestly, that's kind of offensive, but whatever] who can and do actively consider relocation to the US.

The same caliber of developers, but have no interest in ever living in the US, for personal or obligation reasons.

The permanent resident non-Canadian citizen category you allude to.

Google Waterloo for example is mostly full of the second category. Plenty of high caliber talent who are there and not in Mountain View because that's where they chose to be. Because any of them could relocate / transfer to MTV any time they liked, but prefer not to. In my last few years there, there were dozens of people who I met who had transferred (back) into Canada from SV/Bay Area because they simply couldn't stand living there anymore because of cost of living, politics, family, home sickness, etc.

There are other companies that set up shop in Canada merely to siphon the first. They offer an "ok" experience for people who choose to stay, but push hard to get talent to relocate. I get the impression there's lots of this happening in Vancouver in particular.

The prominence of the last (recent immigrant / PR) category is really something that has held back the Canadian tech scene in general TBH. It's a product of international recruitment by the Canadian immigration system. There are shops full of people essentially fresh off the boat from the PRC or Eastern Europe. Many of these are highly qualified -- but in the context of our industry as a whole -- underpaid/mistreated. Others are not as competent. And it's all mixed up, and it has messed up the local tech market, compensation ranges, and quality of work produced.

Of course all of this is in flux and changing because of the rise of remote work.

Engineers with good track record and interviewing skills will have no problem getting US salary in Canada.

In fact Google pays Canadian similar to their non-premiun US locations like Raleigh.

Implicit in your argument is that people would always value SV > the rest of the US > Canada > Poor countries.

There are a lot of very talented people that have values that don't align that way for a variety of extremely valid reasons.

As someone who has the right to work in both Canada and the US, and who has been attempted to recruit by SV companies, I prefer the benefits of living where I do in Canada over the lifestyle costs of living in SV with 3x the money.

Not that simple for startups/small businesses. Dealing with labor law is no joke. I've been unable to hire FTE Canadians due to the legal burden that was going to come with setting up those operations. Larger corps can take advantage while small businesses sometimes can't deal with the paperwork overhead.

Anyone whose good in Canada is already in the US or they don't care about compensation to begin with. Either way you're not getting a top engineer working on your ad-tech business for a third the cost. But if you're building a startup that uses ML to look for 3d printable compliant mechanism you'll be drowning in applications and starved for cash.

As a Canadian that's not really how I see it. I worked for a bit in California and while I was earning more than I do now, the cost of living was probably double what I have right now so the math really wasn't as simple as "move to the US to make more money".

There's a rather simple answer for why you weren't getting paid more.

Are you suggesting that I was bad at my job? If so that seems irrelevant as I'd be bad at it on both sides of the border.

Why not hire completely international then?

Timezones and IP and labor laws mostly.

Having a team completely unavailable during the USA working day is a real pain for collaboration and it's hard to sue people in other countries that "borrow" your source code to make their own version. Also, knowing exactly how to pay (say) a German developer and how taxes work and what the labor laws are is always an issue.

Aside: The very best contractors I ever hired were Ukranian. So many absolutely fantastic talents at around $30 an hour. Then Russia invaded (the first time) and annexed Sevastopol and the USA made it illegal to pay them any more.

I'm in Uruguay, South America, and we're on the East Coast timezone and IP laws are friendly, and if you hire as a contractor, there's no labor law issues.

Of course, people realized that and there's 0 unemployment in IT, however, there's still a long way to go before we get to the Bay Area salaries - 6 figure salaries are only for the top 1% devs and only working for the USA and usually short term contracts, but a decent developer makes north of 50.000 dollars a year which is a pretty good salary here.

+1 I've only had incredible experiences with Ukrainian devs and designers- I hesitate to say best because I've worked with amazing people all over (I was at two gig economy companies that did custom software dev with freelancers) but Ukraine as a destination often stood out for high quality, low prices, and not needing a ton of supervision/detailed instruction.

Shameless plug- a buddy runs a dev shop out there, they have great devs and exceptional designers (and also are doing a fund for Ukrainians impacted by the war). If you're looking for help in that region, they're great people to chat with: https://beetroot.co/

Ukrainians were given full employment rights in Poland after the Russian invasion, so they can just move to Poland (at least the female ones, as males aren’t allowed to leave Ukraine for now).

> the USA made it illegal to pay them any more.

only ones who stayed in Crimea

1. timezones are a PITA. Collabroation with Europe/East-Asia is barely manageable from the West Coast. India is the most painful.

2. english language barriers - half the people I have worked with in South America (Colombia, Brazil) and China were so bad with English that it seriously affected the team's productivity.

Canadians fit the bill on both counts - same timezones and language.

I raise you an Australia. Smaller market and different time zone but cheaper and in my experience they make some exceptional workers/engineers.

I am quite uncertain about the cheaper portion - but the timezones hurt quite a bit and the costs for in-person visits are extremely high. Australia and New Zealand are awesome places (and I'm highly jealous of New Zealand in particular) but a 13+ hr flight to get to the west coast is extremely fatiguing so meetups are highly unlikely - compare that to flying someone down from YVR to SFO and it's a huge price and time difference and SEA and YVR are close enough that the train/bus is usually a very reasonable option.

But who doesn't love a trip out to Oz to 'meet the team'! Same thing with lots of US companies in Ireland (whilst mostly for tax reasons initially, Ireland now is stacked with talent) - trip to Ireland to 'meet the team', pre-covid ain't no one going to say no to those off-sites.

It is going to be an interesting decade, the rise of working from home and ai creeping into every profession will make for some radical changes. Engineering managers can only hold their accountants overlords back for so long. I do hope SFO stops being the centre of the tech world as it is very inefficient, but that's probably 30-40 years away at the earliest unless all out war is triggered.