Once you know that you are an employer, trustee, or salary payer, you will need to open a payroll program account to remit your deductions to the Canada Revenue Agency (CRA). This account is only required once your business has been incorporated or registered, and you have hired employees. If you are intending to hire employees in the future but have not yet done so, you are not required to apply for the payroll tax account at this time.
How often are payroll deductions paid?
Payroll deductions are typically filed on the 15th day of every month. Depending on the nature and size of your business, you may also be eligible for quarterly filings, or an accelerated filing schedule.
How do I make the required remittances?
You can file these remittances electronically with the CRA, and your banking institution can help you make this payment through their online portal.
When is payroll not required?
If your business hires seasonal or casual labour (i.e., the employees are not full-time or regular part-time), you may be able to pay the employees by the hour or on a contract basis without requiring to obtain a payroll account for them. This determination can be complex depending on your specific situation, so we recommend contacting the CRA to check if you would be eligible for this exemption.
What if my business is no longer in operation, or doesn’t have any employees?
If you have wound-up your business, or no longer hire employees, you should notify the CRA so that you can close your payroll account. Unless the CRA is notified by yourself or your accountant or bookkeeper, you will continue to be responsible for payroll remittances.
What about payroll for the business owner?
Typically, small business owners pay themselves via a combination of salary and dividends, and the salary component would require associated payroll remittances to allow CPP contributions. Careful tax planning is required on this topic to ensure you can optimize your tax situation while also staying compliant, so we recommend consulting a CPA about your specific financial and business situation.
How do I set up Payroll with CRA?
You can enroll in the Payroll program online on the CRA’s website, via phone, or by having your accountant or bookkeeper represent you and your business.
How do I keep track of payroll for employees?
Many of the popular accounting software options available today, such as QuickBooks Online, can provide you with access to payroll management and costs. Alternatively, the CRA website also has calculators available to help you determine payroll deductions and the amounts owing.
Typically, small business owners engage their accountant or bookkeeper to help maintain payroll records, and are only responsible to deposit the required remittance amounts into the payroll bank accounts.
What is required from the employee to set up the Payroll Account?
Employees should be registered within 1-2 weeks of employment, and you will need the following information:
• Legal name of employee
• Address of employee
• Date of Birth
• Social Insurance number
• When this employee began working for you
Schedule a meeting
The ground reality is that small business owners find it hard to undertake the responsibility of managing the payroll process because of the administrative strain and compliance burden it places on a small or growing business. If you have been handling your own payroll accounting so far, ask yourself if payroll is really something you want to take on or continue doing.
At Arria CPA, we use secure cloud-based technologies to manage your payroll needs. With a start-to-finish approach, we can help setup your payroll account, maintain employees, and process payroll remittances to the CRA. Contact us for a free, no-obligation consultation to learn more about how we can help you manage payroll for your business.
Disclaimer: Please note that this is only a brief summary and is based on current accounting regulations and tax law interpretations. Accounting regulations and tax laws are subject to continual review and change, so should the facts provided to us be inaccurate or incomplete, or should the law or its interpretation change, our summary may be inappropriate for your uses. This article is written for educational purposes only, and as such, we recommend you consult a professional before making an accounting or tax decision. If you have any concerns, or would like further consultation regarding this matter, please contact us.
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