Payroll and Payroll Responsibilities
If you are considering hiring staff, you will have a new set of responsibilities to your company and to the people who work for you. You will be entrusted with the responsibility to retain and submit money on behalf of your people for Canada Pension Plan (CPP) and Employment Insurance (EI). You are also responsible for retaining the portion of income tax based on the TD1’s that your employees fill out when they begin their employment with you.
You must register your business for a payroll account with Canada Revenue Agency (CRA). If you are already registered with a Corporate account or a GST account, this step is fairly painless and can be accomplished with a phone call to 1-800-959-5525. Your account information and your first remittance form should arrive in the mail the following week of the request. If you do not have any other registrations, call the number provided and the process will be a little more time consuming.
When you hire an employee you must print off a Federal TD1 and the Provincial TD1 for your employee to fill out. You must retain these documents for your files.
Once the forms are filled out you should have the following employee information:
- The date they began working for you
- their full legal name
- current address
- social insurance number
- any amounts of additional income tax they would like you to retain from their income
You will need this information for creating and submitting T4’s and T4 Summaries as well as Record of Employment forms (ROE’s) when your employee leaves. At the end of each calendar year you will be required to provide an annual report (T4) to your employee as well as a T4 Summary Report to CRA. Any additional money owing for the previous calendar year will be required to be submitted at this time or will be subject to additional interest and penalties.
Employees must be provided with a paystub that provides a breakdown of their wages and withholding for each pay period.
Each month on the 15 following the month you have paid your people, you will be required to submit the amounts that you have retained from your employees as well as the employer portion designated your province or territory. You will receive pre-printed forms in the mail each month that must be used. Payments can be made at your bank or by mailing in the forms and the payment.
I highly recommend you use the bank to make payments as mail does go missing and the interest and penalties are particularly high for payroll. If the 15th falls on a Saturday or Sunday – make sure the payment is submitted in the business day prior to 15th. There is no forgiveness for a day or two late because of the weekend philosophy with CRA!
Canada Revenue Agency is very strict with payroll submissions. This is one area where it is particularly easy to steal from your employees. Be aware that once registered with Canada Revenue Agency for payroll your payments will be monitored and if a payment is missed or a form is missing from their records, you can anticipate a call quite quickly.