[VPM] RFC: paying Canadians with US dollars

[Darren Duncan]

I have a question for those of you experienced in either being a 
contractor or in hiring contractors, particularly for technical or 
computer jobs such as software programmers.  I am asking it from the 
context that I plan to hire contractors myself in the future, mainly 
for programming work.

1. How acceptable or normal is it for you, as a Canadian, to 
negotiate a contract, either on a per-hour basis or a per-job basis, 
denominated in American dollars, rather than in Canadian dollars?

This is assuming that you are living more or less full time in Canada 
and your primary expenses are denominated in Canadian dollars; hence, 
your effective income would be variable depending on the currency 
exchange rates.

To simplify this question, assume you have the choice as to whether 
any actual currency exchanging is being done by yourself or the other 
party, so you can factor this detail out of your answer.

My reason for asking is that I am considering, with my new 
Victoria-based consumer software business, to try and do all 
accounting possible in terms of American dollars rather than Canadian 
dollars.  I'm not sure how common this is, or whether it is even 
possible considering government rules, or whether it is the best 
choice.

At one end, I am already constrained to operate in American dollars 
because my product sales prices are denominated in US dollars like 
all computer products are.  Like with all other such products, the 
price that Canadians pay for mine will vary based on the exchange 
rate.  A majority of customers will probably be Americans, due to 
their much greater relative population.

My thinking is that if I denominate all my primary expenses, namely 
labour, in American dollars, then I will be fairly well insulated by 
exchange rate changes, since most in and out is in the same currency. 
At the same time, I expect that most people who work for me will be 
in Victoria (a few will live in other countries).  Where possible, I 
will get all my main bank accounts and credit accounts to be US 
dollar denominated.  Probably the main stuff I'll have to deal with 
in Canadian dollars is rent, utilities, and taxes.

To mitigate losses from the currency conversion process, I would 
expect to have 2 main savings accounts, one US$ and one CDN$.  All 
transactions involving either currency would draw from or deposit 
into the account of the same currency.  Then any converting will only 
be done on an as-needed basis, between those two accounts, if one 
needs to be replenished from the other.  Hence, as little converting 
as possible is done.

2. So have you heard of any Canadian businesses operating this way 
before?  Anything to watch out for, such as government rules?

3. Would you be willing to accept such a fluctuating rate in your own 
pay, if you were in this position?

Thanks in advance for any feedback. -- Darren Duncan