I did a short contract with an entity in the US and am trying to figure out how they can pay me. I have a business and a Canadian business account.
Is there a recommended low risk/effort service I should use? I am in Ontario if that matters.
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I’ve used e-transfer, PayPal, and Wise (formerly TransferWise) and they all work. I’m a bigger fan if wise since the conversion fees are the lowest.
You should not charge tax since its a US company and you don’t owe hst on that work (still need to for income tax though obviously).
Haven’t used a business account before so I can’t speak to the pros and cons of that approach
Thanks, especially for the tip on not charging tax. I should do that for my Canadian clients.
Have then do an international wire transfer into your bank account.
For bonus points, open a USD-denominated bank account at your local branch, and have the money wired in there. I prefer to leave the USD there until the exchange rate is more favourable, then transfer.
Also, if you have a particularly large sum ($25k-50k or more) you can usually call your local branch and ask for a ‘special quotation from the forex desk’ to get them to shave a few points off the exchange rate.
Oh that’s a great idea. Thanks!
At first my plan was to open an actual account in the US, to transfer from. Opening an US account is a supreme pain in the ass though. It didn’t work out. Didn’t help that the guy at the friggin bank didn’t know what he was doing (what else is new), but I just ended up giving up because it was quite clearly going to be a pain.
I ended up opening a borderless chequings account at TD. It’s denominated in USD, and it’s fairly easy to wire into. You’ll need to know the swift code, and sometimes the whole branch, transit number (which they don’t have)/account number thing can sometimes trip the Americans up, especially if they don’t wire Canada that often, or deal with smaller regional banks. If that is causing issues for them at their facilities, what you can do is add an extra 0 to the financial institution code, and just have them combine them in the account number for the wire. For example 00010123411112222, with 0001 being the bank in this example, 01234 being the transit number in this example and 11112222 in this example being your account number.
Remember too, that a wire is going to hit you with $17-20 in fees every time, so find out what your fees will be for incoming wires, and negotiate that into your contract that they’ll cover that.
For conversion, definitely don’t use the bank unless you need that money this very instant. I used to use Knightsbridge, but they are slower than molasses (especially when it seems the trade is not in their favour), and you sometimes have to talk to people that are rushed and who don’t listen very good. I found that led to mistakes that you have to scramble to cover and fix when you got the confirmations, and one time I didn’t catch it and they almost overdrew my account.
Instead, I’ve been using Remitbee. It’s been giving me good conversion rates (often 40-50 basis points from midrate, which is comparable to what Knightsbridge takes, and is nowhere near comparable to the bank, who will take 250 basis points). It’s also pretty quick (usually 2-3 business days) and they just draw it out of the borderless account as an etf and put it back to my CAD chequings account. Being that it’s all online through their platform, you don’t need to trade with any humans, which mitigates the translation mistakes, and best of all it keeps the records of your trades, that will help you at tax time. So far l’ve been pretty happy with using them.
Also, just in case you aren’t aware, make sure you fill out a W-8BEN form and submit it to them. That way they don’t have to withhold tax.
I have worked in the US while living in Canada for more than 12 years. The first job I had in the US was a contract. I opened an account with RBC Bank in Atlanta and the company paid me into that account. I could then just transfer the money from my US funds account to my Canadian account. I have also worked for companies that used PEOs to employ Canadians. My current employer setup a Canadian subsidiary.
Thanks. It’s not a contract with regular payments, just a couple of one time payments, and there’s no formal employment agreement (just bulk services agreements), so a PEO doesn’t apply here.
Most of my friends living in the US will use Wise or Norbert’s Gambit to transfer their funds from the US to Canada because of the better exchange rate.
I’ve been using Wise.com for these kind of things: their multi currency account allows you to get a US account number that your client can use to pay you with a standard ACH transfer, like they would pay an employee.
I’ve been using that with US and Euro zone clients for years and never had a problem.
Thanks! Wise seems to be the common advice here and elsewhere, so I’ll do that. Appreciate it.
Edit: everything I said below is for my own personal use, not a business. I don’t know if it’s all applicable to a business.
I think many of the big (Canadian) banks will let you open a US dollar account with them. I have one with CIBC. I am able to wire money to it from my actual US bank account that I opened when I was working in the US. I’m not sure if a US company could use it for direct deposit, though.
Be warned though, if you want to use them to convert the US dollars to Canadian dollars, CIBC offered me an absolutely brutal exchange rate, a few percent higher than the market rate. They told me to wire my money first and then they could get a “premium” exchange rate, but it still wasn’t very good.
An option that might be good is Wise (formerly called “TransferWise”). Their fee is a lot better than the banks (and they clearly show how much they’re charging above the market rate). They even let you open accounts for different currencies, so that might be another option for receiving the money from the US employer. I used them to convert smaller amounts of money (when I first moved and needed rent/spending money)
(note: I’m not a financial advisor or anything like that, this not advice)
For actually converting from USD to CAD, I used “Norbert’s Gambit” when converting a few years of savings all at once. I used QTrade. It has a fixed fee associated with it (cost of each wire transfer and buying and selling the ETFs) and it can take a while (edit: ~weeks) for each step to go through. But it’s nice in that the cost is flat, so for large amounts it’s negligible. I can go into that in more detail if anyone is interested.
Thanks! For me, it’s too low frequency transaction-wise to do a full international business account. Fees aren’t worth it. Definitely worth considering for a real business. This is just a side thing.
You typically have to register with govt for doing international business, compared to interprovincial business.
