We're excited to announce the launch of Salsa's embedded payroll solution in Canada. This launch is a game-changing development for platforms that serve small and medium-sized businesses (SMBs) across North America. Today, Salsa is the first company to offer payroll infrastructure that serves the US and Canada with a single API. That means the same integration and all the same UI components will now serve your customers in both markets.
Our embedded payroll solution is already making waves south of the border in the US, where Salsa is the fastest and easiest way to launch a payroll product. We take the complexity out of calculations, tax filing, and money movement while providing simple ways to build a payroll product experience inside your application. We're proud to mirror all of these features in Canada, which gives platforms a shortcut to launch a fully compliant payroll product for Canadian businesses.
Why support Canada?
We saw requests for Canada coming from two different sources - the first was large software platforms centered in the US market but operating globally. These platforms typically expand to English-speaking countries first. As a result, we saw a familiar pattern where Canada was the most significant international customer base for many US SaaS platforms. The second opportunity we observed was Canadian founders serving the US market who started in Canada and have a considerable customer base there. We want to help all these platforms serve customers with the same feature set, no matter where they're based. Canada was an essential first step in this effort. We also wanted to show that Salsa is built with a global core - it's a primary part of our architecture. Canada isn't an "add on" - it's part of our thesis and it's been baked into our product decisions since day one. This philosophy will enable our expansion to other countries, too.
Why Most Payroll Providers Don't Support Canada
Launching embedded payroll support in Canada is a significant milestone for us because payroll engines are tough to reconfigure after you've built them. Typically, payroll companies in the US can only ever expand to serve other countries if the architecture decisions made early on allow for the everyday things we see abroad: prolific union rules, different time-off tracking, and myriad pension support. Fortunately, we built flexibility into our core. Our team built payroll for ten countries in a previous life and incorporated all those learnings. [.c-highlighted]Launching Canada is an exciting showcase demonstrating what our infrastructure can do and why it's important to build from day one with a global core. [.c-highlighted]
Here are some of the things that break when most US-payroll engines try to take on Canada:
PTO and Time Off
- Many US payroll providers don't have a time off accrual engine and instead rely on workforces that don't need time off, or they rely on the business to track their own balances. That doesn't work in Canada, and it's one of the reasons Salsa was very early to build a comprehensive time off engine. But even a US-compliant product wouldn't work up north, here's why:
- Localizing a US-based time off accrual engine is a far bigger undertaking than mere content changes. Rest of world - and Canada - requires more complexity and support around accrual rules and if you don't anticipate these requirements early, it would be quite an undertaking to adapt.
- Here's one example:
- In the US, vacation time accrual is largely based on hours worked. If you work X hours, you accrue Y paid time off.
- In Canada, there are different accrual rules and two common handlings: 1) you can pay employees time off on every paycheck 2) you can accrue both hours and amount balances. These are two separate balances to track, manage, and pay out.
- Fortunately, even Salsa's earliest release of our PTO engine in 2023 supported this multi balance accrual and payroll handling - and today it's very effective in Canada.
Workers Comp
- In Canada, workers comp is run at the provincial level and has very different rules and handling compared to what most payroll providers are designed to support in the US, we had an easier time supporting these requirements because we began building for them long before our Canada expansion
Reporting Requirements
- Record of Employment (ROE) reporting is a market expectation in Canada that US-based products usually struggle to support
Logistically supporting another jurisdiction
- Especially in the embedded world, APIs and UI components are hard to change after they're built. The typical path to support a new country would entail creating new APIs, and either building new UI experiences, or not providing them and requiring partners to build their own user interfaces.
- Salsa's approach was quite unique: our same APIs and UI components are adaptive [.c-line-highlighted] based on the jurisdiction of the employer. [.c-line-highlighted] That means if you've already integrated Salsa in the US, the same integration can now support Canada, too. That's how our model was originally designed and it's how we aim to continue to support future geographies, too.
Overcoming Compliance Challenges to Launch in the Canadian Market
One of the most interesting challenges to launching a payroll product in Canada is a relatively new one: not configuring our payroll engine but rather setting up the rails for compliant money movement in the post-COVID environment. Before 2022, moving money within Canada was easy as the government didn't significantly regulate payroll providers. All that changed due to the Freedom Convoy in 2022 when truckers protested against the country's COVID-19 restrictions. The Canadian government saw these protesters receiving funding via peer-to-peer payment methods from sponsors abroad and realized they had no way to oversee or regulate this money movement. As a result, the government introduced sweeping legislation, making it more difficult for everybody - even payroll providers - to move money in Canada. We began by building a new compliance program from the ground up to ensure our onboarding and monitoring processes were ready for Canada support. But the hardest part was yet to come: we spent almost a year registering with the Canadian authorities, created new banking partnerships, and underwent audits to become regulated as a Money Services Business in Canada.
Canada has a high bar for compliance, from stricter Know Your Business (KYB) and Know Your Customer (KYC) requirements compared to the US, to the upcoming Retail Payment Activities Act (RPPA) that's coming into effect in November 2024, and that's why we don't rely on our US processes but instead built new compliance programs with our in-house experts that have done it in these markets before. This isn't our first foray into multi-country and that's why our partners trust Salsa to get the details right.
Bridging the Border to Support North America
Launching our embedded payroll solution in Canada will significantly impact the Canadian payroll industry. As we've seen in the US, Canadian businesses will soon have a choice to move payroll into the software platforms they already use to manage their business. The result will be a considerably better experience and substantial time savings. In addition, by taking the work out of running payroll, we're freeing business owners to invest more time doing what they enjoy.
Moreover, our embedded payroll solution will also benefit Canadian workers. With the software's automated features, employees can receive their paychecks more quickly and efficiently. And we're working on ways to get workers paid more frequently. Additionally, our tax filing feature ensures that employees' tax withholdings are accurate and transparent - reducing the likelihood of underpayment or overpayment. Our features will leave workers paid more often with fewer tax payment errors.
Launching our embedded payroll solution in Canada is an exciting step for us and the broader North American payroll industry. Platforms with operations in the United States and Canada can now use the same payroll API to manage their payroll products meaning more customers get to use more features. We're excited to enable the next wave of payroll products and see them built on both sides of the border.
If your platform or software application serves the Canadian market, now is a great time to think about adding a payroll solution to your feature set. Schedule a demo to get started today.
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