Payroll Procedures for Canadian Firms: A Simplified Overview

Hiring Employees: Every successful company relies on effective employee recruitment. Ensuring timely and accurate payment is crucial. Mistakes in this process can lead to legal and financial repercussions, especially when dealing with entities like the CRA, Ministry of Labor, and WSIB.
Gathering Essential Information: When you bring someone on board, gather the following:

Business Registration for Payroll: If you have a business number, register your payroll account with the CRA. This account is a 15-digit number inclusive of your nine-digit BN. You can open this account via the RC1 form, CRA online services, or the CRA business helpline.
WSIB (Workplace Safety and Insurance Boards): Determine if you need WSIB registration in your province. Not all businesses in Ontario require WSIB coverage. The coverage and premiums depend on the industry, risk, and work environment.
Employer Health Tax (EHT): EHT varies by province. In Ontario, you must register if you exceed the allowable exemption.
Determining Payroll Frequency: Decide how often you’ll run payroll. Common frequencies include:

Calculate gross salary
Deduct federal income tax, provincial tax, CPP/QPP contributions, and EI premiums
Handle other deductions like union dues or RRSP contributions
Contribute to CPP, EI, EHT, WSIB, etc.

Remitting Deductions to the CRA: Remit taxes and other deductions to the CRA based on a set frequency.

Year-End Documentation: Provide T4 Slips to each employee and file a T4 summary return annually.
Record of Employment (ROE): Issue an ROE when an employee leaves or if there’s an earnings interruption.
Record Keeping: Maintain thorough records for potential audits or inquiries from regulatory bodies.