What is Payroll and why is it important?
Payroll is a responsibility in which a business pays its employees. It can be distributed in the form of a cheque or direct deposit. It also includes keeping a record of those payments and paying taxes on behalf of the employees.
Payroll is one of the most important aspects of a business. It affects employee morale and reflects a business’s financial stability and reputation. Because employees rely on their pay cheques, errors or untimely payment can create a lack of trust. But when pay cheques are accurate and delivered in a timely manner, employees are more engaged and motivated.
In order to pay your employees properly in Canada, you must comply with the requirements of the Canada Revenue Agency (CRA) and send the correct payroll deductions.
How to do Payroll
5 steps to running payroll in Canada
- Create a Payroll Account
In order to send your payroll deductions to the CRA, you’ll need a CRA payroll deductions program account. If you already have a business number (BN) and have a pre-existing CRA program account, you can easily add a payroll deductions account to it.
If you don’t have a BN, you can get one by contacting the CRA.
- Collect and Record Information from Employees
During the hiring process, be sure to examine new employees’ SIN cards and keep it for your records. They also need to fill out the appropriate federal and provincial Form TD1 to determine how much tax is to be deducted from their income.
- Make the Appropriate Payroll Deductions
Before making deductions, ensure you’ve added any eligible taxable benefits to your employees’ pay. For example, if you provide an employee a company car, parking, lodging, etc. in addition to their wages, it could be considered a taxable benefit.
- Remit Deductions to the CRA
Once you’ve made the appropriate payroll deductions, you will have to remit them to the CRA. You can remit electronically or use paper remittance vouchers and receive the statements of account by mail. If you choose to remit electronically, you can view statements and transactions by using your online business account on the Government of Canada website.
- Complete T4 Slips and Information Returns
As an employer, you’ll need to complete a T4 slip for each employee and complete the T4 summary form every year. T4 slips can be filled out electronically using CRA’s T4 web application or through an online PDF. You must file the T4 information return and give your employees the T4 slips on or before the last day of February following the calendar year.
Your business records, including records related to your payroll must be kept at your place of business or at your residence in Canada unless permission has been given from the CRA to keep them elsewhere.
How our Payroll services can help your business
Payroll can be a time-consuming job for a small business owner. This job needs to be performed consistently once or twice a month. In addition, the information needs to be correct so that employees are paid the right amount, the withholdings are accurate, and tax remittances are made timely. To do this efficiently, a small business owner should consider outsourcing this job to free up time.
At A-Accounting, we utilize the latest online and cloud technologies, and offer complete end-to-end payroll solutions so you can get back to focusing on your business. Simply drop us a line to set up a session and let us take care of the numbers for you!