United States vs Canada
Hiring in the United States vs Canada, an honest guide
Both are English-speaking, EOR-friendly markets. The United States runs lower mandatory contributions and at-will employment in 49 states; Canada requires just cause for termination and adds ten provincial compliance layers on top of federal rules. Neither is clearly easier. The right choice depends on where your talent is and what your finance team needs to model.
1,000+ companies advised on cross-border hiring
- 7.65%
- US employer FICA (Social Security 6.2% and Medicare 1.45%). Source: IRS Publication 15, 2024.
- ~8.3%
- Canada employer CPP plus EI on pensionable and insurable earnings. Source: CRA, 2024.
- $599
- Teamed flat EOR fee, FX absorbed at zero markup, covering both the United States and Canada.
Should you hire your next person in the United States or Canada?
Both are English-speaking, EOR-friendly markets. The United States runs lower mandatory contributions and at-will employment in 49 states; Canada requires just cause for termination and adds ten provincial compliance layers on top of federal rules. Neither is clearly easier. The right choice depends on where your talent is and what your finance team needs to model.
At a glance
United States
Best for: companies that want at-will flexibility, a broader technology talent pool in most verticals, lower mandatory employer contributions, and faster entity setup when the headcount crossover arrives.
Canada
Best for: companies that want to avoid US health-insurance complexity (Canada's public healthcare removes the ACA employer mandate), faster access to international engineering talent via the Global Talent Stream, or a bilingual French-English workforce.
Shared by both: English-speaking workforce (outside Quebec) · EOR coverage from all major providers · North American time zones · Common law employment framework (outside Quebec)
| Where it matters | Who leads | Why |
|---|---|---|
| Mandatory employer contributions | United States | United States employer FICA is 7.65% (Social Security 6.2% plus Medicare 1.45%). Canada CPP plus EI employer runs roughly 8.3% of pensionable and insurable earnings, before Ontario and Quebec provincial levies. |
| Employment termination flexibility | United States | At-will employment in 49 US states: either party can exit for any legal reason with no required notice or severance. Canada requires just cause or statutory notice plus common-law notice on top. |
| Health benefits obligation | Canada | Canada's public healthcare covers most medical care, removing the need for a mandatory employer medical plan. ACA in the United States requires employers with 50 or more full-time equivalents to offer affordable minimum-value coverage. |
| Immigration speed for international talent | Canada | Canada's Global Talent Stream offers 2-week processing for high-skilled roles. US H-1B is subject to an annual lottery with multi-year processing times for most applicants. |
| Compliance complexity | Draw | Both markets stack compliance layers differently. United States: federal FLSA plus state law (California and New York the most demanding). Canada: federal Canada Labour Code for regulated sectors, plus ten provincial Employment Standards Acts. Quebec adds Civil Code and Bill 96. |
| Path from EOR to your own entity | United States | Delaware LLC or C-Corp formation is typically faster and lower cost than a Canadian federal or provincial corporation. Both are workable via Global Entity and Employment Operations (GEMO) when you are ready. |
United States on G2
Who United States is for
This guide is for growth-stage and scale-up companies with a United Kingdom, European, or Asia-Pacific headquarters that are placing their first or second North American hire and need to decide which side of the border to start from before committing to an EOR contract or an entity setup.
Not the right fit if
- Already committed to one market. If you have signed an EOR contract in one of these markets, this comparison is less useful. Focus on compliance and getting the most from your EOR in the country you are already in.
- Hiring at scale in both markets simultaneously. If you are building teams across the United States and Canada at the same time, the decision shifts from market selection to entity setup timing and payroll architecture. Talk to Teamed about a dual-market plan.
Find your pick in 20 seconds
| If you are… | Start with | Why |
|---|---|---|
| A tech company that wants the widest talent pool | United States | Largest engineering and product talent pool by volume. At-will flexibility and lower mandatory contributions are additional advantages. |
| A company approaching 50 full-time employees | Canada | ACA kicks in at 50 FTEs in the United States, adding a mandatory health-coverage obligation. Canada's public healthcare removes that cost and complexity. |
| A company that needs to sponsor international talent quickly | Canada | Global Talent Stream: 2-week processing for eligible high-skilled roles. US H-1B lottery has a multi-year wait for most applicants. |
| A company expecting to set up a legal entity within 24 months | United States | Delaware C-Corp or LLC is typically faster to form, lower cost to maintain, and more familiar to investors than a Canadian corporation. |
| A company that needs a bilingual French-English team | Canada (Quebec) | The only bilingual province. Bill 96 adds French-language compliance requirements, so choose an EOR with real French-language employment-law capability. |
What is hiring in the United States vs Canada?
An Employer of Record (EOR) legally employs your person in the United States or Canada through its own entity or a vetted local partner. The EOR issues the employment contract, runs payroll, remits income tax and mandatory contributions, files the year-end returns, and holds the local employer obligations while you direct the day-to-day work. You can hire compliantly in either market before you have a registered entity there.
The two markets look similar from the outside: both are English-speaking outside Quebec, both are well-covered by every major EOR, and both share common-law employment frameworks outside Quebec. The differences that matter to a finance or people-ops team are: mandatory contribution rates (United States employer FICA is 7.65%; Canada CPP plus EI together run roughly 8.3% on pensionable and insurable earnings, before Ontario and Quebec provincial levies); employment basis (at-will in 49 US states versus just cause required across Canada, with statutory and common-law notice stacked on top); and compliance architecture (federal plus state layers in the United States, with California and New York the most demanding; federal plus ten provincial layers in Canada, with Quebec adding its Civil Code and French-language mandate under Bill 96).
Employer costs, what you actually pay above salary
The headline salary is only part of the cost. In the United States, employer FICA adds 7.65%: Social Security at 6.2% on wages up to $168,600 and Medicare at 1.45% on all wages. FUTA adds a net 0.6% on the first $7,000 after the standard state credit. State unemployment (SUTA) is on top, at rates that vary by state and your claims history. In Canada, CPP runs 5.95% on pensionable earnings up to C$68,500 and EI employer runs approximately 2.32% on insurable earnings up to C$63,200. Ontario adds the Employer Health Tax (1.95% on Ontario payroll above C$1 million) and Quebec adds the Health Services Fund. On pure mandatory contributions, the United States runs marginally lower for most salary levels. Health-insurance premiums in the United States can more than close that gap once you approach the ACA threshold.
| Detail | United States | Canada |
|---|---|---|
| Social insurance contributions | FICA 7.65%: Social Security 6.2% capped at the $168,600 wage base, Medicare 1.45% uncapped. Source: IRS Publication 15, 2024. | CPP employer 5.95% on earnings up to C$68,500. EI employer approximately 2.32% on earnings up to C$63,200. Source: CRA, 2024. |
| Federal unemployment | FUTA: net 0.6% on first $7,000 after the standard state credit (6% gross minus 5.4% credit). Additional state unemployment (SUTA) is variable. | Employment Insurance covers both unemployment and parental-leave funding; the same 2.32% employer rate funds both. No separate federal unemployment tax. |
| Provincial or state add-ons | SUTA rates vary from under 1% to over 10% depending on the state and employer experience rating. California and New York add extra employer levies on larger payrolls. | Ontario EHT: 1.95% on Ontario payroll above C$1M (smaller payrolls exempt). Quebec Health Services Fund: approximately 1.65 to 4.26% depending on proportion of payroll subject to Quebec tax. |
| Health benefits cost | ACA mandate applies at 50 or more FTEs. Typical employer contribution for a single-employee medical plan: roughly $6,000 to $9,000 per year in 2024. Pre-50 FTE: no mandate but competitive candidates expect a plan. | Provincial public healthcare covers most medical care. Supplementary benefits (dental, vision, extended health, life insurance) are market practice but not a statutory mandate. Total supplementary cost is typically materially lower than a US group medical plan. |
Employment law, what happens when a hire does not work out
The termination rules are the sharpest difference between the two markets. In the United States, at-will employment lets either side end the relationship at any time for any reason that is not legally prohibited. Montana is the only exception. In Canada, ending an employment relationship without just cause requires notice or pay in lieu: the statutory minimum under most provincial Employment Standards Acts (the floor), plus whatever the courts would award under common law on top. For white-collar and senior roles, common-law notice can run to one month per year of service or more. Budget for that contingent liability before you make a senior hire in Canada.
| Detail | United States | Canada |
|---|---|---|
| Basis of employment | At-will in 49 states. Employer can terminate for any legal reason without required notice or severance, subject to anti-discrimination law, WARN Act obligations for mass layoffs, and applicable state rules. | Just cause required for summary dismissal without notice or pay in lieu. Employers who cannot demonstrate just cause must give statutory notice under the provincial ESA and may face common-law notice awards on top. |
| Statutory minimum notice | No federal minimum. WARN Act: 60 days for mass layoffs of 50 or more employees at a site with 100 or more workers. State mini-WARN laws in California, New York, and New Jersey add stricter requirements for smaller layoffs. | Provincial ESA minimums typically run 1 week per year of service, capped at 8 weeks (formula varies by province). British Columbia and Quebec have distinct calculations. Ontario adds a severance payment requirement for employers with payroll above C$2.5M. |
| Common-law notice | Not a feature of US employment law in at-will states. Severance is negotiated privately or per contract. Courts do not award common-law notice periods in at-will jurisdictions. | Courts award notice periods significantly above the ESA statutory minimum for white-collar and senior roles. A rough starting estimate: 1 month per year of service, subject to mitigation by re-employment. This is a contingent liability on your books for every Canadian hire. |
| Risk of contested termination | Lower in at-will states. The main risks are discrimination claims (Title VII, ADA, ADEA), retaliation claims, and WARN Act violations for mass layoffs. At-will contracts reduce wrongful-dismissal exposure. | Higher exposure to wrongful-dismissal claims if just cause is not established or notice is miscalculated. A contested termination in Canada requires documented reasons, careful notice calculation, and potentially a severance negotiation. Your EOR should coordinate this through real HR and legal experts. |
Compliance complexity, where the rules stack up
Both markets layer federal and sub-national rules, but the architecture differs. In the United States, the federal Fair Labor Standards Act (FLSA) sets the minimum floor; state law adds on top and can be far more demanding. California is the most complex US state: its own wage-and-hour regime, meal and rest break requirements, CCPA data-privacy obligations, and the AB5 contractor classification test. A California hire is materially more compliance-intensive than a Texas hire. In Canada, the federal Canada Labour Code covers federally regulated industries (banking, transport, telecommunications, postal). All other employment falls under provincial law. Ten provinces, each with its own Employment Standards Act. Quebec adds the Civil Code (not common law), the Charter of the French Language under Bill 96, CNESST for workplace health and safety, and QPIP for parental benefits.
| Detail | United States | Canada |
|---|---|---|
| Governing framework | Federal FLSA plus state employment law. Federal anti-discrimination statutes (Title VII, ADA, ADEA, FMLA) apply nationally. State-specific wage, leave, and classification rules are additional and can be extensive. | Federal Canada Labour Code (federally regulated sectors) or provincial Employment Standards Act (all other employment). Ten provinces, each with distinct rules. Federal human rights law plus provincial codes apply concurrently. |
| Most complex jurisdiction | California: wage-and-hour regime, meal and rest break requirements, CCPA data obligations, PAGA class-action exposure, and the AB5 contractor classification test make a California hire the most compliance-intensive in the United States. | Quebec: Civil Code (not common law), Bill 96 French-language employment contracts and workplace documents, CNESST for health and safety, and QPIP for parental benefits make Quebec the most distinct and compliance-intensive Canadian province. |
| Multi-location risk | A team across five US states faces up to five wage-and-hour regimes, five paid-leave rules, and five SUTA rates. An EOR that tracks state-level obligations per employee removes that overhead. | A team across three Canadian provinces faces three provincial ESAs. Quebec is always the most distinct. An EOR that handles French-language contracts and CNESST contributions is essential if any hire is in Quebec. |
Health benefits and leave, the full employer picture
Health benefits are where the two markets diverge most clearly for a growing team. In the United States, once you reach 50 full-time equivalents, the ACA employer mandate requires you to offer at least one plan that meets minimum value and affordability standards or pay a shared-responsibility penalty. The cost of arranging and administering a US group medical plan, even through an EOR, is real. In Canada, provincial public healthcare covers most medical care. You will still arrange supplementary benefits (dental, vision, extended health, life insurance) as market practice, but the catastrophic-medical-cost risk sits with the government, not with you.
| Detail | United States | Canada |
|---|---|---|
| Medical coverage | Employer group medical plan. ACA mandate applies at 50 or more FTEs. Typical employer contribution: roughly $6,000 to $9,000 per year for a single-employee plan in 2024. Pre-50 FTE: no mandate, but most candidates in knowledge roles expect coverage. | Provincial public healthcare covers most medical care. Employer arranges supplementary benefits (dental, vision, extended health, life insurance). Total supplementary cost is significantly lower than a US group medical plan. |
| Parental leave funding model | FMLA: 12 weeks unpaid at qualifying employers (50 or more staff). No federal paid parental leave. Thirteen states plus the District of Columbia have paid family-leave schemes, funded via payroll tax contributions. EOR tracks which states apply to each hire. | Employment Insurance funds maternity leave (15 weeks) and shared parental leave (up to 40 weeks standard or 69 weeks extended). Quebec QPIP covers maternity, paternity, parental, and adoption leave at higher income-replacement rates. EOR runs CPP and EI contributions; the government funds the leave pay. |
| Paid sick leave | No federal paid sick leave mandate. California, Washington, Massachusetts, and other states require paid sick leave ranging from 3 to 10 days. EOR tracks the rules applicable to each hire by state. | British Columbia: 5 days paid sick leave per year. Ontario: 3 days unpaid under the ESA (many employers provide additional paid days as practice). Federal sector: 10 days. Quebec: 2 days paid. |
The talent market, what each side of the border offers
On volume, the United States has the larger pool in most professional and technology roles. Its technology hubs (San Francisco, Seattle, New York, Austin, Boston) have deep concentrations in software engineering, product, data, and growth functions. Canada has a strong and growing technology and finance talent base, concentrated in Toronto, Vancouver, and Montreal. Canada's immigration pathway via the Global Talent Stream offers 2-week processing for eligible high-skilled roles, which is far faster than US H-1B timelines. Montreal has a strong AI research and games-industry cluster. Quebec gives you access to a bilingual French-English workforce, which matters for companies serving French-speaking markets in Europe or West Africa.
| Detail | United States | Canada |
|---|---|---|
| Technology and professional talent | Largest pool in the world by volume in most technology and finance roles. San Francisco, Seattle, New York, Austin, and Boston are the deepest hubs. Salary benchmarks are higher than Canada for equivalent roles. | Strong and growing pool in Toronto, Vancouver, and Montreal. Montreal has a notable AI research and games-industry cluster. Toronto and Vancouver rank among the top North American technology hubs. Nominal salaries are generally lower than US equivalents. |
| Immigration speed | H-1B cap (65,000 general, 20,000 advanced-degree): annual lottery with a March filing window and processing times that can exceed two years. L-1, O-1, and other non-cap categories available but not broadly applicable. | Global Talent Stream: 2-week processing for eligible high-skilled roles in designated occupations. Express Entry for permanent residency is faster than most US immigration pathways. Canada has been actively competing for international technology talent. |
| Salary benchmarks | Higher nominal salaries in technology and finance, particularly in San Francisco and New York. State income taxes vary: California, New York, and New Jersey run high. Total employer cost (salary plus FICA, SUTA, and health benefits) is higher in practice than the mandatory-contribution comparison suggests. | Generally lower nominal salaries than US equivalents for the same role, which partly offsets the CPP and EI contributions and supplementary benefits cost. Benchmark per city: Toronto rates differ from Calgary or Halifax. The currency exchange rate between Canadian and US dollars adds an FX variable to international companies. |
When to move from EOR to your own entity
EOR is the right starting structure in either market. The crossover question is the same in both: at what headcount does the cumulative EOR fee approach the fixed cost of a registered entity, a local director where required, bookkeeping, payroll filings, and annual corporate returns? That crossover tends to arrive earlier in Canada than in the United States because entity setup and ongoing maintenance in Canada (particularly at the provincial level) is typically lower cost than in high-cost US states like California or New York. Teamed models the crossover per market and can set up and manage your own entity in both the United States and Canada via Global Entity and Employment Operations (GEMO) on the same system, with no re-onboarding of your existing EOR employees.
| Detail | United States | Canada |
|---|---|---|
| Entity setup speed | Delaware LLC or C-Corp: typically 1 to 2 weeks to form, plus several more weeks to obtain an EIN, register as a foreign entity in operating states (California, New York registration adds cost), and open a business bank account. | Federal incorporation under the Canada Business Corporations Act or provincial incorporation (Ontario, British Columbia): typically 2 to 4 weeks for formation. Registration in the operating province required. Some provinces require a Canadian-resident director. |
| Approximate crossover headcount | Rough guide: at 8 to 12 full-time employees in the same US state, the cumulative EOR fee approaches the fixed cost of an in-state entity. California and New York raise that fixed cost, pushing the crossover up. Teamed models the exact month per state. | Rough guide: at 6 to 10 full-time employees in the same Canadian province, the cumulative EOR fee approaches fixed entity costs. Ontario provincial registration and CRA payroll-account setup are relatively straightforward. Teamed models the crossover per province. |
| Managing the transition via GEMO | Teamed Global Entity and Employment Operations (GEMO) sets up the US entity in the relevant state, transfers employees onto the new entity payroll, and can keep managing it for you. No re-onboarding. Same system. | Teamed GEMO sets up the Canadian federal or provincial corporation, handles CRA registration, transfers employees, and manages ongoing payroll and filings. Same system. No re-onboarding. |
Why the comparison matters
Behind every line item is a real person, in a real place.
The fee, the FX and the support model are not abstractions. They decide whether the person you hired in Barcelona or Rome is paid right, on time, by someone who knows their employment law. That is the comparison worth running.
What each stakeholder evaluates
| Criterion | Legal | Finance | People Ops | Security |
|---|---|---|---|---|
| Employer contributions and total cost | Ask your EOR for a full employer-cost model for both markets: FICA and SUTA for the United States; CPP, EI, and any provincial levy for Canada. Confirm whether health-insurance premiums (United States) or supplementary benefits (Canada) are included in the EOR fee or billed separately. | At the same gross salary, mandatory contributions run about 7.65% in the United States (FICA) plus state unemployment, versus roughly 8.3% in Canada (CPP plus EI) plus provincial add-ons. The gap reverses once you factor in a US group medical plan for employees in employer-mandate territory. Model both scenarios against your actual headcount forecast before committing. | In Canada, provincial public healthcare removes the complexity of choosing a medical plan for employees. You arrange supplementary dental, vision, and extended health. In the United States, employees expect a medical plan as a primary benefit; the EOR bundles that into the package but the cost is real and scales with headcount. | Both markets require payroll tax filings: quarterly 941s and annual W-2s in the United States; T4 slips and CRA remittances in Canada. Ask your EOR whether its maker-checker controls cover both markets, and whether you receive an itemised breakdown of each contribution type on every invoice. |
| Employment law and termination risk | US at-will means you can exit a hire faster and with lower direct cost in most states. Canada's just-cause framework means a contested termination needs documented reasons, a proper notice or pay-in-lieu calculation, and in some cases a severance negotiation. Budget a contingent liability (common-law notice plus any severance) for every Canadian hire, particularly at senior levels. | A wrongful-dismissal payout in Canada can reach six months or more of salary for a white-collar employee with several years of service. That is a balance-sheet liability. US at-will removes most of that contingency for non-executive, non-contract roles in most states. California, Massachusetts, and New York add state-level protections that reduce the at-will advantage somewhat. | Canada's stronger employment protections often produce a more stable employment relationship: employees feel more secure, and turnover in Canada tends to be lower than in equivalent US roles. If long-term retention is the priority, the Canadian framework is not a disadvantage. | A contested termination in either market generates documentary and data risk. Your EOR should run maker-checker approvals before any termination is executed, maintain an audit trail of the notice, the documentation, and any severance calculation, and hold those records in line with the applicable data-retention requirements (CCPA in California; PIPEDA across Canada). |
| Compliance architecture and jurisdiction selection | A California hire carries the highest US compliance load: California wage-and-hour rules, meal and rest breaks, CCPA data obligations, PAGA class-action exposure, and AB5 contractor classification. Budget for more compliance overhead than any other US state. In Canada, a Quebec hire adds French-language contracts under Bill 96, CNESST, and QPIP. Both are workable through an EOR with real HR and legal experts who handle the jurisdiction-specific requirements. | Multi-state or multi-province hiring multiplies the compliance surface and the number of tax accounts to maintain. A US team across five states may face five different wage-and-hour regimes, five paid-leave rules, and five SUTA rates. An EOR that tracks obligations per employee per state or province removes that overhead and reduces your year-end reconciliation risk. | In Quebec, employment contracts and all workplace communications must be provided in French under Bill 96, even if the employee's working language is English. Ensure your EOR issues French-language contracts and payslips in Quebec. In California, ensure the EOR issues the California-specific disclosure notices required on start dates. | California's CCPA and Canada's PIPEDA impose different data-residency and breach-notification requirements on personal data held about employees. Ask your EOR where employee data is stored, whether data crosses the US-Canada border, and what the breach-notification SLA is under each regime. |
How Teamed handles your first hire in the United States or Canada
Most companies start in one North American market and expand. The choice shapes your employment contracts, your payroll architecture, and the timeline to your own entity. Teamed models both before you commit.
Step 1
Map the cost and compliance profile
Tell Teamed where your candidate is and what role you are filling. We model the full employer cost for both markets: FICA or CPP and EI, any state or provincial add-ons, and the health-benefits obligation. You compare the two on the same numbers before you sign the offer letter.
Step 2
Issue the compliant employment contract
Teamed issues the contract under the laws of the relevant state or province. For a Quebec hire, that means a French-language contract compliant with Bill 96. For a California hire, that means California-specific disclosure notices. The contract is ready within days.
Step 3
Run payroll and remit contributions
Teamed runs payroll in the employee's currency, remits FICA or CPP and EI to the IRS or CRA, files quarterly and annual returns, and shows the FX rate against mid-market at zero markup on every invoice. You see the full breakdown every payroll run.
Step 4
Model the crossover to your own entity
When your headcount in a market approaches the crossover point, Teamed flags it and models the exact month your own entity becomes the better structure. Via Global Entity and Employment Operations (GEMO), Teamed sets up and manages the entity on the same system, with no re-onboarding of existing employees.
Dyke Yaxley · UK chartered accountancy
100% audit capacity added. Zero entity setup.
- Audit capacity in 2024
- +100%
- Compliance issues across the engagement
- 0
- Cross-border hires, both retained
- 2
- Entity setup required
- None
Challenge
Dyke Yaxley, a UK chartered accountancy with over a century of history, was turning down audit work in 2024. Qualified auditors were in short supply in the United Kingdom, and the firm needed to find talent where the talent was, fast. Opening a foreign entity to test a new market felt like the wrong move for a first cross-border hire.
Approach
Dyke Yaxley partnered with Teamed to hire two qualified audit professionals in South Africa via EOR. Teamed handled the employment-law side end to end: compliant contract, local payroll, statutory tax obligations, and onboarding. No entity setup, no permanent-establishment risk, no foreign legal counsel on retainer.
Result
Both hires exceeded expectations on technical work, client satisfaction, and cultural fit. Audit capacity doubled in 2024. Zero compliance issues across the engagement. The firm moved from declining new audit work to taking on additional clients.
Interactive tool
Model the full cost of your next hire in the United States or Canada
Enter your candidate's location and salary. The employer-cost calculator shows the mandatory contributions, any benefits obligation, and the total monthly cost in both markets side by side, so you can make the decision on numbers, not assumptions.
Decision checklist
- Start in the United States if at-will flexibility matters and your candidate is already there. You can exit a hire without notice or statutory severance in 49 states, and mandatory employer contributions (FICA 7.65%) run marginally lower than Canada on most salary levels.
- Start in Canada if health-insurance complexity is a concern. Public healthcare removes the ACA employer mandate and the cost of arranging a medical plan, freeing the supplementary budget for dental, vision, and extended health that employees actually notice.
- Start in Canada if you need to bring in international engineering talent quickly. The Global Talent Stream offers 2-week processing for eligible high-skilled roles. The US H-1B is subject to an annual lottery with multi-year processing for most applicants.
- Choose Quebec if you need a bilingual French-English hire or want access to Montreal's AI and games-industry talent. Bill 96 adds French-language compliance requirements, so confirm your EOR can issue French-language contracts and payslips.
- Use an EOR for the first hire in either market before opening an entity. Both are well-covered, and EOR lets you test the market, the role, and the candidate before committing to the fixed cost of a registered entity and ongoing corporate filings.
- Model the crossover before you reach it. At roughly 8 to 12 employees in the same US state or 6 to 10 in the same Canadian province, the cumulative EOR fee approaches fixed entity costs. Ask Teamed to model the exact month your own entity becomes the better structure per market.
Honest take
When Canada is the better choice
- Choose Canada if your candidate is already there. The right hire in the wrong market is still the right hire. If the person you want is in Toronto, Vancouver, or Montreal, hire in Canada and let the entity question wait until the headcount justifies it.
- Choose Canada if health-insurance overhead matters. Public healthcare removes the ACA employer mandate and the group medical plan cost that applies to US employers approaching 50 full-time equivalents. Supplementary benefits in Canada are real but typically cheaper than a US medical plan.
- Choose Canada if you need faster access to international engineering talent than the US H-1B process allows. Canada's Global Talent Stream offers 2-week processing for eligible high-skilled roles, compared with multi-year H-1B timelines.
Neither market is unambiguously easier. The United States leads on mandatory contribution rates and termination flexibility; Canada leads on health-benefits simplicity and immigration speed. Choose on what your team and your finance model actually need, not on which market sounds simpler.
Frequently asked questions
Is it cheaper to hire in the United States or Canada?
It depends on three things: salary level, state or province, and headcount. Mandatory employer contributions run slightly lower in the United States: FICA 7.65% plus state unemployment, versus Canada CPP plus EI at roughly 8.3% plus provincial levies. But US employer-sponsored health insurance can add $6,000 to $9,000 per employee per year for a medical plan, which more than closes the gap as you approach the ACA threshold of 50 full-time equivalents. Canada's public healthcare removes that cost. At a small team (well under 50 FTEs) in a state without a high SUTA rate, the United States runs marginally lower on mandatory costs. Run both models for your actual salary level and headcount before deciding.How do termination rules differ between the United States and Canada?
The United States is at-will employment in 49 states. You can terminate an employee for any legal reason (not discrimination or retaliation) at any time, without required notice or severance unless your contract or policy commits to it. Montana is the exception. Canada requires just cause for dismissal without notice. Without just cause, you must give statutory notice under the applicable provincial Employment Standards Act (typically 1 week per year of service, up to 8 weeks) and may also owe common-law notice on top. For white-collar and senior roles, common-law notice can run to 1 month per year of service or more. Budget that contingent liability for every Canadian hire.Do I need a legal entity to hire in the United States or Canada?
No. An Employer of Record (EOR) lets you hire compliantly in both markets without a registered entity. The EOR becomes the legal employer, issues the employment contract under local law, runs payroll, remits contributions to the IRS or CRA, and holds the local employer obligations. You direct the work. The EOR structure is typically right until your headcount in a single state or province reaches 8 to 12 employees, at which point the cumulative EOR fee approaches the fixed cost of running your own entity. Teamed models that crossover per market and can set up and keep managing your own entity via Global Entity and Employment Operations (GEMO) when you are ready.What is employment law in Quebec, and how does it differ from other Canadian provinces?
Quebec differs significantly from the nine other provinces. It operates under the Civil Code of Quebec rather than common law, which changes how contracts are interpreted and how employment relationships are governed. Bill 96, an amendment to the Charter of the French Language in force from 2022, requires that employment contracts, internal communications, and workplace documents be provided in French, even if the employee's working language is English. Employers with 25 or more employees in Quebec must hold a francisation certificate. Quebec also has its own parental insurance plan (QPIP) with higher income-replacement rates than the federal EI parental leave, and CNESST for workplace health and safety. Choose an EOR that can issue French-language contracts and handle CNESST and QPIP contributions.When should I move from EOR to my own entity in the United States or Canada?
As a rough guide, EOR stays cost-effective until roughly 8 to 12 employees in the same US state, or 6 to 10 employees in the same Canadian province. Above those levels, the cumulative EOR fee approaches the fixed cost of a registered entity, a local director where required, bookkeeping, and annual tax filings. The exact crossover depends on the salary mix, the specific state or province, and your back-office overhead. Teamed models the crossover per market proactively and can set up and keep managing your own entity via Global Entity and Employment Operations (GEMO) in both the United States and Canada on the same system, with no re-onboarding of existing employees.Does Teamed cover both the United States and Canada at the same EOR fee?
Yes. Teamed's flat fee of $599 USD or £479 GBP per employee per month covers both the United States and Canada at the same rate. FX is absorbed at zero markup on the fee, and the applied rate is shown against the mid-market reference on every invoice. Statutory employer contributions (FICA for the United States; CPP and EI for Canada) are passed through at cost on top of the flat fee. There are no setup fees and no offboarding fees.
Common questions
What are the main differences between hiring employees in the United States vs Canada?
Three differences stand out for a fast-growing company. First, employment basis: the United States is at-will employment in 49 states (you can terminate for any legal reason without notice or severance); Canada requires just cause for summary dismissal or statutory notice plus common-law notice on top. Second, mandatory employer contributions: US FICA runs 7.65% (Social Security 6.2% plus Medicare 1.45%); Canada CPP plus EI employer together run roughly 8.3%. Third, health benefits: the ACA in the United States mandates affordable minimum-value coverage for employers with 50 or more full-time equivalents; Canada's provincial public healthcare removes that obligation for most medical care. Both markets are well-covered by EOR providers, and both are workable as a first hire market. Use EOR for the first hire and model the crossover to your own entity before you reach 10 employees in a single state or province.Can a UK company hire employees in Canada or the United States without a local entity?
Yes. An Employer of Record lets a UK company hire compliantly in both Canada and the United States without registering a local entity. The EOR becomes the legal employer in-country, issues the employment contract under local law (provincial in Canada, state in the United States), runs payroll in the employee's currency, remits income tax and mandatory contributions to the IRS or CRA, and holds the local employer obligations. You direct the day-to-day work from the United Kingdom. The EOR structure is the right starting point for the first few hires; as headcount in a single state or province grows, Teamed models the crossover to your own entity via Global Entity and Employment Operations (GEMO) and can set it up and keep managing it for you.
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