Hiring your first employee is a milestone. It also makes you responsible for withholding and remitting money on the government’s behalf — so it’s worth setting up properly.
Before the first pay
- Open a payroll program account. This is an “RP” account added to your CRA business number.
- Collect TD1 forms (federal and Ontario) from the employee to determine tax withholding.
- Confirm employee vs. contractor. The CRA looks at the actual working relationship, not just what the contract says.
- Check WSIB. Many Ontario employers must register with the Workplace Safety and Insurance Board, depending on industry.
- Know your Employment Standards basics — minimum wage, vacation pay and public holiday pay under Ontario’s Employment Standards Act.
Every pay period
Deduct from each paycheque:
- CPP contributions
- EI premiums
- Income tax
As the employer, you also pay your own share of CPP and EI. Keep a payroll register showing gross pay, each deduction and net pay.
Every month
Remit what you deducted, plus your employer share. For most new small employers, remittances are due by the 15th of the month after the pay was made. Late remittances can attract penalties quickly, so treat this date as fixed.
Every year
- T4 slips and summary — generally due by the last day of February for the previous calendar year
- Employer Health Tax (Ontario) — eligible employers are exempt up to a payroll threshold; larger payrolls may need to register and file
When someone leaves
Issue a Record of Employment (ROE) when an employee has an interruption of earnings — for example, a resignation, layoff or leave.
The simplest setup
Use Canadian payroll software that calculates deductions automatically and posts journal entries to your books. Then the only things left to manage are accurate hours and on-time remittances.
This article is general information, not legal, payroll or tax advice for your specific situation.