I am a different expert with a different answer.Nonresident
employees WHO PROVIDE SERVICES from abroad are NOT subject to U.S. withholding
Why? Because the source of income
from services is where the services are performed (not where payment is made).
Further, Non-resident aliens
are NOT subject to tax
What you SHOULD do is request that the employee document this/her foreign status on Form
And for this purpose, there's no Taxpayer Identification Number required.
Another best practice is to be sure to delineate the location of the services in their contracts.
And finally Comp. to nonresident employees working abroad is not subject to FUTA
You do not need to go to the expense of farming this out.
Your constraint will likely be simply NOT withholding (a possible payroll system constraint).
But again, get the W-8, document in every way possible that this person does not provide services from within the US.
Your paying him does NOT create a presence in Canada ... UNLESS he is selling there, you provide an office there, etc.
If this person is comply providing a service to you and not doing something himself that would created presence (and given your business category, not likely) you would have no presence.
let me know if you have questions ...