Doing business in Canada can be lucrative, but it does come with a set of challenges, one of which is payroll. Though you likely process payroll for your company in your home country, doing so in Canada will be slightly different, so you’ll need to adjust the way you process it. It’s an important part of doing business and it needs to be handled correctly—from the very start. To get you started on the right foot, consider these five tips.
Register Your Business
The first thing your new business in Canada is going to have to do is register with the appropriate government bodies. You’ll need to get a business number, after which you’ll have to register for several accounts, which include corporate income tax, GST/HST, import/export, worker’s comp and payroll before you can even start to pay your workers. Remember to keep on top of deadlines for remitting to all of these accounts, too, to ensure you stay in compliance.
Collect the Right Information
Once you start on-boarding employees, make sure you’re collecting required information from them. You’ll need their social insurance numbers to ensure they’re legally allowed to work in Canada, and you’ll need them to complete federal and provincial TD1 forms, which will allow you to know how much you need to be deducting from their pay cheques.
Understand How to Properly Calculate Pay Cheques
How much you’re going to pay your employees is going to change depending on each one’s individual circumstances. Whether or not they are classified as employees or contract workers, whether they need their wages garnished for child support or other reasons, whether they make commission, use a company car, or get paid for meals, and even their age can make a difference in the amount of taxes, CPP, and EI you deduct for every individual worker.
Not to mention, if they get raise or their circumstances change, you’ll have to recalculate—it’s not just a one-time thing to consider. You have a responsibility to your workers and to the government to calculate pay cheques properly so make sure you have a handle on it.
Know the Law
The laws governing payroll in Canada are not only strict, but they’re also ever changing. At least once a year, sudden changes will appear, and you’ll need to keep on top of them—it’s your responsibility as an employer in this country. Plus, the laws that relate to your business will vary depending on your industry, type of workers, and location.
First, you’ll need to manage federal taxes, which are consistent across Canada and include Worker’s Comp, Employment Insurance, and Canada Pension Plan contributions, which all have their own regulations, exceptions and maximums to follow. But you’ll also need to deal with provincial or territorial tax legislature, too, which will vary depending on where you’re based.
Partner Up with an Employer of Record
The simplest way to process payroll correctly from the very start of your new business ventures in Canada is to partner up with an employer of record. Your EOR will take care of all the paperwork, time sheets, the calculations and deductions, the taxes, the remittance payments, and even your annual taxes. They’re experts after all, so you can have the peace of mind knowing that your employees are always paid correctly and according to Canadian law.
You won’t have to worry about being hit with fines, penalties, or a bad reputation caused by payroll errors. Your EOR will give you all of the help and support you need to start payroll off on the right foot.