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3 Brilliant Ways to Improve Payroll

Posted by Karen McMullen

|

Jun 15, 2016 9:00:00 AM

3_Brilliant_Ways_to_Improve_Payroll.jpgPayroll efficiency is one of the most important things a company can focus on, but naturally, it can often be forgotten about in the wake of more core activities. We forget that despite payroll's designation as a relatively peripheral function, it makes an incredible impact on our day-to-day business, our budget, and the morale and well being of our employees. That's why, when looking for ways to improve payroll, many companies find themselves at a loss.

Sometimes it's not as simple as trying to cut down time spent, or shave budgets. For smaller businesses, the budget they have can often be precious and cutting it can only do more harm than good—that's why a solid strategy is needed to ensure that everything goes as smoothly as possible. Luckily, we've collected some brilliant ways to improve payroll efficiency and most of them only require a change in perspective.

1. Go Digital

There's no doubt about it—we live in the digital age. While many companies are already ahead on this one, there are still thousands of businesses who haven't yet migrated to digital services. This might mean they're still writing paper cheques, or digging out old receipts locked away in boxes in a storeroom somewhere. While traditionally this might have worked for many, nowadays it only slows down the process and creates a lot of unneeded difficulty.

When you digitize these processes (things like payroll and human resources), cross-referencing becomes a breeze. You can pull up old referential pay stubs, historical expense reports, and employee files without any trouble at all. Consider offering direct deposit if you don't already—it not only improves accuracy and saves paper, but many employees find it more comforting since they no longer have to worry about not being able to pick up their cheques on time (or, worst case, physical loss of the cheque). If you or your employees prefer traditional paper cheques, consider offering digital checks. Manually writing dozens of cheques is not only time consuming, but more prone to error.

2. Focus on Communication

Digitizing is one of the best ways to improve payroll, and it also leads to our next point—communication and transparency. Now, more than ever, people expect transparency in their workplace, in their home life, from their politicians—everywhere. This creates a better peace of mind, fosters trust and respect and can actually help payroll efficiency as well. By maintaining and sharing a clear pay schedule that can be easily accessed by employees, you can help make sure all expenses, invoices, and receipts are submitted on time. Allowing your employees access to the calendar so they can tell you when they need to book off time makes things dramatically easier to manage from the HR perspective as well. Consider how much time is taken up by minor requests, clarifications, and questions with easy answers. Now think of how much of that could be saved with simple communication.

3. Access a Payroll Service Provider

Some companies, especially smaller ones, are always looking for ways to improve payroll but simply don't have the time. There's always new technology, innovations around every turn and it can be difficult to keep up. That's why so many have made a more drastic change—partnering with a payroll service provider. In effect, outsourcing your payroll and HR can dramatically improve every aspect—risk minimization, legal compliance, the best software, and consistently up-to-date specialists all in one. By outsourcing your non-core operations, you can focus on the things that matter most and know that everything's being taken care of.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Tips

Payroll Tips for International Companies Expanding to Canada

Posted by Ray Gonder

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Dec 2, 2014 8:05:00 AM

Payroll Tips for International Companies Expanding to CanadaExpanding into Canada may be the next logical move for your international company, but Canadian payroll can be a big hurdle to overcome. Something as technical as payroll shouldn't get in the way of your business operations and future goals. That's why we've put together these payroll tips to help international companies that are ready to move into Canada but need guidance on how to get started.

The simplest way to handle payroll in Canada is to use an Employer of Record service, which already has established procedures and registrations. However, you can manage your own Canadian payroll as well. Here's what you'll need to do.

Register Your Business

If your business is operating in Canada, you'll need to register for a Business Number. You'll also need to register for five program accounts: Import/Export, GST/HST, Corporate income tax, worker’s compensation and payroll. By registering for these accounts, you'll be able to remit payments to the government and stay compliant. You can register for these accounts online, through the mail, or in person.

Manage Federal Payroll Taxes

Some payroll taxes are consistent for employees all over Canada. These payroll taxes include CPP (Canada Pension Plan), EI (Employment Insurance), and Worker's Compensation. Although these taxes must be paid for all employees, the rates may vary from place to place.

Figure Out Local Payroll Taxes

Once you have figured out CPP, EI, and Worker's Compensation for your employees, you'll need to learn about province- and territory-specific payroll taxes. For example, there are three additional payroll taxes in Quebec over and above the previously mentioned payroll taxes. In addition, employers in Ontario must pay EHT (Employer Health Tax) in addition to basic payroll taxes. You can do your investigating into local payroll taxes at the Canada Revenue Agency's website.

Make Your Calculations

It's one thing to know that you have to pay certain payroll taxes, and it's something else entirely to know how much to pay for each employee. One of the most difficult parts of Canadian payroll is knowing how to classify each of your employees. There's a great deal of paperwork that needs to be properly filed for each employee, and then you'll need to classify each employee based on their paperwork. This is not just a one-time task. If circumstances change for an employee--for example, if an employee gets a raise or has a child or gets married--you'll have to reclassify their paperwork, and this affects your payroll taxes.

Keep Up With Canadian Tax Law

Just when you feel that you have everything under control, the laws governing Canadian payroll taxes change. In general, this happens at least once a year. Legal interpretations can bring about sudden changes in the way laws are followed. It's imperative that you keep your ear to the ground and follow changes in Canadian tax law.

Some international companies have the resources and wherewithal to handle Canadian payroll on their own, but if you don't currently have systems in place to manage Canadian payroll, you can still expand into Canadian territory by using an Employer of Record to handle all of the above tasks for you. They already have the experience and systems in place to take care of payroll complexities, leaving you to do what you do best.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Tips, International Companies

US Companies Expanding to Canada: Payroll Tips

Posted by Stacey Duggan

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Jul 9, 2014 9:05:00 AM

us companies expanding into canada payroll tipsFor US companies expanding into Canada, handling payroll obligations can be one of the biggest obstacles. Learning a new legal system, purchasing new payroll software, and meeting administrative requirements are just a few of the hurdles that must be overcome. These hurdles have caused more than a few US companies to give up on their Canadian expansion plans. Unfortunately, by giving up, those companies are missing out on one of the most lucrative global markets. If you've considering a Canadian expansion, don't get discouraged--here are a few tips to help you along.

Understand Your Obligations

Canadian employment and payroll regulations differ greatly from those in the US. This affects every aspect of your payroll obligations. Everything from worker classification to pre-employment drug tests are treated differently in Canada. Trying to operate the same way you do in the US is a non-starter.

To operate in Canada, you have to understand the rules you're required to obey. If you don't the fines and penalties will be substantial. This means that you need to learn an entirely new legal system, based different social and cultural mores.

You can choose to do this on your own, investing the time and effort to study the payroll regulations and employment laws. Or, you can work with a professional or specialist that already has training and experience with Canadian payroll regulations. Either way, the responsibility for abiding by Canadian laws rests on your shoulders.

Get the Tools

Due to the many differences between Canadian and US payroll requirements, your existing payroll software probably won't work in Canada. There are just too many differences, from filing deadlines to documentation requirements. US companies expanding into Canada typically need to purchase payroll software designed for Canadian payroll.

As you probably know, payroll software is readily available, and expensive. You can purchase your own software, and then invest the time and effort to learn how to use it. Another option is to work with a professional that already has the software. Companies that handle payroll will have the latest software, and the cost is shared by all of their clients. This saves you the upfront expense of the software, and saves your staff from having to learn a new system.

Administrative Setup

Before you begin operating in Canada, you need to get all of your administrative ducks in a row. That means setting up a presence in Canada, creating bank accounts, buying insurance, and setting up your accounts with the various government agencies. All of this needs to be done before you can legally start paying Canadian employees.

Setting all of this up on your own is possible; a lot of US companies expanding into Canada have done it. It's also time consuming and expensive. If you have any problems along the way, your expansion will suffer delays. The longer it takes to get everything ready, the longer it is before you start bringing in profits.

Have you considered the fact that maybe you don’t have to register a business in Canada? 

Consider this; if you’re hiring a Canadian workforce to benefit your U.S. clients and you will have no financial transactions taking place in Canada then maybe jumping the hoops of registering a business is not necessary. All you may need is an employer of record (EOR) service in Canada to take care of the workforce obligations such as taxation and employment standards compliance.  The Payroll Edge can be your EOR, commonly known in the U.S. as a Professional Employment Organization (PEO), so you can expand your workforce in Canada quickly and not have to worry about learning and keeping up to date with Canadian rules and regulations.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Payroll Tips, US Firms Expanding into Canada

Employer of Record Service: Your American Business Presence in Canada

Posted by Ray Gonder

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Mar 26, 2014 10:21:00 AM

American Business Expansion into Canada and when you should contact the Payroll Edge for our Employer of Record Services Great! Your expanding operations north of the border but with your American business expansion into Canada you wonder; How am I going to pay my Canadian employees?

Unless you are using an Employer of Record Service in Canada (similar to a PEO in the U.S.) and want to hire an employee you must register your business with the Canadian government. Federally registering is the first step and then registering a business presence in each province and / or territory (Canada has 13) you are operating in would be the next step. Of course this process can be even more complicated if you are a Limited Liability Company (LLC) in the US as Canada has no similar status and again has different rules depending on the province or territory.

Other Government Accounts U.S. based companies will need to pay Canadian Employees;

Registering your business is not the only registration you will do as a new business in Canada. You must also apply for a payroll tax account number into which you will remit the employer and employee taxes for the Canada Pension Plan and Employment Insurance.

These two taxes are in every province and territory across Canada with the difference being that each province has its own rate in which these taxes are calculated. Keep an eye on the rates as they often change for each province at the beginning of each year and its important to know when paying a Canadian. Some provinces have other payroll taxes such as the Employer Health Tax in Ontario and the Health Services Fund in Quebec so it’s important to know what other type of taxes are associated with the province the work is being done in. It’s worthy to note that as a company in Canada, you will be given a weekly, semi-monthly, monthly or quarterly deadline for these payroll taxes but for those provinces that have extra taxes (like the 4 provinces that have a health care tax) your deadlines might be on a different schedule. The Canadian Government will not hesitate to apply interest and penalties to slow paying accounts.

The best advice an American company should take when hiring workers in Canada is to use a Canadian Based Employer of Record service. Using an EOR like The Payroll Edge enables U.S. based companies to focus on their core business rather than learning a whole new payroll entity. Contact The Payroll Edge today! 

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Payroll Tax in Canada, Payroll Tips, EOR, Employer of Record, Payroll Tax Tips, U.S. Business operating in Canada, Paying a Canadian, Canadian Employer of Record, American PEO, Payroll Tax Laws in Canada, American Business in Canada, Canadian-Based EOR, Canadian EOR, PEO Services, Canadian Payroll Services

Payroll Tax in Canada - What You Need to Know

Posted by Ray Gonder

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May 30, 2013 10:40:00 AM

payroll tax in canada what you need to knowIn Canada, small businesses have been identified as the greatest source of uncollected taxes, so the CRA is focusing its efforts on enforcing payroll tax policies for small businesses. Therefore, it's essential that you learn about payroll tax in Canada and what your obligations are as an employer. Pay close attention to the following five things that you need to know.

1. Remittance Due Dates

The CRA must receive your payroll tax remittance on or before the 15th day of the month after you made the deductions. Some businesses are eligible for quarterly remitting. If you don't remit your payroll taxes on time, you are subject to fines, so always stay ahead of the game by making payroll tax remittance a priority on your to-do list. Remember that if your remittance due date falls on a weekend or public holiday, your remittance is due on the next business day.

2. Payroll Deduction Tables

The federal government regularly produces payroll deduction tables to help employers deduct the correct amount from each employee's paycheque. Each province and territory has its own payroll deduction tables, so use the appropriate tables for your employees. You should use the table for the province or territory where the employee reports to work, even if it's different from the location of the employee's home. Payroll deduction tables change from time to time, so check the CRA's website for the latest tables.

3. CPP Contributions

After you've figured out your employees' payroll tax deductions, you still need to take care of CPP contributions. CPP contributions should be deducted for all employees who are 18 years old or older but younger than age 70.  

4. Employment Insurance Premiums

Employers are required to withhold EI premiums up to a set maximum for the year. Once your employees' maximums have been met, you won't withhold any money from their paycheques until the following calendar year. The CRA publishes tables telling you how much to withhold for employees, based on their wages.

5. Bonuses and Retroactive Pay Increases

If you pay year-end or other bonuses, or if you give your employees retroactive pay increases, you need to deduct the following items from their pay: CPP contributions, EI premiums, and income tax. Refer to the CRA's website for instructions on how to calculate taxes for bonuses and retroactive pay increases.

These five items are by no means everything you need to know about payroll tax in Canada. Because not only does the employer have to worry about calculating and remitting the employee withholding deductions, there are also the burdens the employer must pay, including their percentage of EI and CPP, as well as workers’ comp and EHT in Ontario. Not only that, these different government agency accounts can all have different remittance frequencies, and usually on different days of the month. It becomes even more complicated for businesses operating in more than one province.

Keeping this all straight and remitting on time, never mind just paying staff, can cause big headaches and huge wastes of time for an average business. But payroll services specialize in these tasks. The Payroll Edge, for example, keeps up to date on tax legislation and has contacts at the CRA for when unusual situations arise. We can handle all aspects of your payroll, from setting up and properly maintaining your accounts with government authorities, to delivering paycheques to your employees, to providing expert HR advice. You don't have to do a thing – except keep your business running just the way you want it run.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Tax, Canadian Payroll, Payroll Tax Calculations, Payroll Tax in Canada, Payroll Tips, Payroll

Public Holiday Questions for Canadian Payroll

Posted by Stacey Duggan

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May 27, 2013 12:51:00 PM

CanadaPayrollIn light of the May long weekend, here are the top 5 public holiday payroll questions under the Employment Standards Act as seen on Lexology.

 

  1. Do we have to provide our staff with the civic holiday (first Monday in August)?
    Although many employers provide their staff with the civic holiday, it is not required under the ESA. The required public holidays under the ESA are: New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Christmas Day, Boxing Day.
  2. When staff are off on the public holiday, we just pay them a day’s pay, right?  Not necessarily. Employees are entitled to “public holiday pay”, which is calculated by taking into account the last 4 weeks’ wages (plus any vacation pay) and dividing that figure by 20. This calculation may be less than a day’s pay (e.g., if the employee did not earn wages – maybe because of an unpaid leave – during the previous 4 weeks).
  3. We provide our staff with two “floating holidays” (i.e., to be taken at the employee’s discretion) instead of Victoria Day. Is this permissible? Generally speaking, yes it is. If an employer is providing more paid holidays (under the same conditions) than the ESA requires, this will generally be considered as a “greater right or benefit” than the statutory minimum and therefore permissible.
  4. Can we just pay our staff “time-and-a-half” for working on a public holiday?  If the employee agrees to work during the public holiday, the employee can receive regular pay for the holiday worked plus a substitute holiday with “public holidays pay”. Alternatively, if the employee agrees, he/she can work the public holiday and receive “public holiday pay” PLUS “premium pay” (1.5 times an employee’s wages). Assuming the employee worked his/her regular schedule during the last 4 weeks, the “public holiday pay” will generally equal a day’s pay. Therefore, adding the “premium pay” can result in a total of 2.5 times the employee’s pay for the public holiday worked.
  5. An employee has a history of calling in sick on the Friday before the holiday Monday. Is there anything we can do?  The employer can consider enforcing the “before and after” rule. Under the ESA, employees must generally work the shift before the public holiday and the shift after the public holiday to be entitled to the public holiday provisions of the ESA unless the employee can show reasonable cause for missing the shift. To the extent that the absence was not allowed by the employer (e.g., the employee does not have proper medical documentation for the absence) the employer can consider not paying the employee for the public holiday, as well as disciplining the employee.

Topics: Payroll Tips, Payroll Calculator, public holiday pay, stat holidays, calculating holiday pay, civic holiday

Understanding Payroll Tax Calculations

Posted by Ray Gonder

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May 6, 2013 10:11:00 AM

understanding payroll tax calculationsPayroll tax calculations can seem like a pretty straightforward affair. Employee income is compared to a tax chart or entered into accounting software, and the corresponding tax amount is remitted to the CRA. Of course, if it were really this simple, nobody would ever need to engage accountants or payroll services. As with most things that involve federal and provincial governments, nothing is as simple as it seems. The regulations affecting taxes are numerous, often vague, and always changing. Understanding exactly what is necessary, and what’s at stake, is critical to avoid costly errors.

If it’s so easy, why isn’t everyone doing it themselves?

There are nearly 200 regulations that impact tax calculations and HR management. Not all of those regulations concern the CRA. Other agencies are waiting in the wings to collect their share. Calculating the remittances for other agencies can be difficult, and the results can vary widely depending on the status of the employee, the province in which they principally work, and any benefits that may affect their reportable income. Mistakes can result in fines and civil penalties, along with potentially being required to repay thousands for a misclassified employee.

Employee status and reportable income are two areas where businesses frequently make errors. There are strict regulations concerning the difference between contractors and employees. A business that oversteps those regulations could owe tens of thousands in unpaid benefits, insurance and pension contributions, and uncollected taxes.

Reportable income is not just what an employee earns in an hour. There are pages of CRA documents describing other benefits that must be reported as income. Subsidized housing, a company car, even something as innocuous as on-site daycare, may be considered income. Again, the regulations can be vague, and vary from province to province. Errors can lead to insufficient remittances, which can lead to a visit from the CRA.

Other remittance calculations, including CPP and EI contributions, are based on these other numbers. If the original calculations are incorrect, they will cause a ripple-effect, creating errors in all subsequent calculations. Misunderstanding a single vague regulation could result in dozens of errors for a single employee. As those errors pile up for months, the eventual cost to the business grows exponentially. When the CRA or other authorities finally catch the error, the resulting expense could be devastating.

How a Payroll Service is Better

Payroll services have the obvious advantage of performing these calculations thousands of times a month. Their entire business is focused on understanding the current laws and regulations, and being informed about proposed and pending regulatory changes. A payroll service that makes costly mistakes for its clients wouldn’t survive long.

High-quality service providers also offer their clients the benefit of professional representation in the event of an audit. They can provide document preparation, legal consultations, and even representation at the audit itself. A company that employs a reputable payroll service provider will never be alone when facing a government audit.

Doing It On Your Own Can Be an Unnecessary Risk

Some businesses believe that they can save money by handling their payroll tax calculations internally. This may be true—in the short term. All of those savings can be wiped out in an instant by an unfavorable government audit. A single error, for a single employee, could consume more than it would cost to engage a payroll provider for months or even years.

Payroll service providers have the experience and expertise to provide reliable, error-free service for hundreds, or even thousands, of businesses. In the event of an audit, they also have the experience and expertise to successfully represent and defend those businesses.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Tax, Payroll Service Provider, Canadian Payroll Deductions, Payroll Tax Calculations, Payroll Tips, Payroll Service, Payroll, Payroll Deductions, Payroll Tax Tips

Understanding Payroll Tax

Posted by Ray Gonder

|

May 2, 2013 9:56:00 AM

understanding payroll taxOne of the most important and, unfortunately, confusing aspects to processing payroll is understanding payroll tax. Knowing how to handle payroll tax is critical if you want your business to run smoothly and not run into any trouble with the CRA. You can learn about payroll tax yourself, or you can hire a payroll service provider to handle issues involved in payroll tax. Either way, payroll tax is not optional. Here's what's involved.

Acquiring a Business Number and CRA Account

Not all businesses in Canada need business numbers assigned by the CRA. "Small suppliers," businesses that have total revenues of $30,000 or less (before expenses) for the last four consecutive business quarters, are not required to obtain CRA accounts and business numbers. If your business has made more than $30,000 before expenses, however, you must comply with this guideline. If you're unsure about whether or not your business qualifies, visit this site to calculate your small supplier status. If your business needs a business number and CRA account, you can open your account online. 

Staying On Top of Employee Information

Once you have a business number from the Canada Revenue Agency, you need to begin collecting information from your employees. Each employee must have completed federal and provincial TD1 forms. Filling these forms out should be part of your hiring process. In addition, employees should each fill out a personal tax credits return form, which determines how much tax should be withheld from the employees' paycheques.

Determining Employees' Taxable Benefits

In most cases, Canadian payroll deductions include three items: income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums. For each of these items, you must use the provincial or territorial tables for the location where your employees report for work. Also, employers who provide board and lodging, the use of a company car, paid parking, or low-interest loans must include these benefits in the calculations.

Remitting Deductions and Contributions to the CRA

Each time a payroll deduction remittance is due to the CRA, you must remember to send the funds to the CRA along with your business number. Depending on your business' status, you may have to remit your deductions and contributions quarterly or more frequently.

Completing Year-End Forms to the CRA

Your payroll tax duties don't end when you finish payroll after each pay period. You're also required by law to file year-end forms with the CRA and distribute year-end tax information to your employees. T4 Slips are due to your employees by the last day of February each year, and you must also send a T4 Summary to the CRA. These slips and summaries help the CRA to collect funds and maintain accurate records on taxes paid by Canadian employees.

Payroll tax is a complex and ongoing task for any business. If you don't have a full-time employee who can see to these matters, it may be wise to employ a payroll service to manage them. It will cost much less than hiring someone – even part-time. A competent payroll service stays on top of ever-changing tax codes and rules, so you don't have to spend precious time tracking changes that may affect your payroll. Payroll services are experts in tax reporting, so you know the job will be done right the first time, and you won't have to worry about paying fines for missed deadlines or costly mistakes.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Tax, Payroll Service Provider, Payroll Tips, Payroll Service, Payroll, payroll solution, Payroll Tax Tips

What Payroll Deductions You Need to Make In Canada

Posted by Ray Gonder

|

Apr 30, 2013 11:07:00 AM

what payroll deductions you need to make in canadaCorrectly paying your employees is one of the most important responsibilities of any company, yet payroll can be a difficult and cumbersome process for even the most advanced organizations. By making yourself well-versed in what deductions must be made from employees’ pay, you will be more easily able to process accurate paycheques.

A great place to start when determining what payroll deductions you must make is to take note of all taxable benefits for your employees. Think through things like employer-provided board and lodging, transportation, or anything else that doesn't include actual money. These types of items may be considered taxable benefits.

The key here is to ensure you’re recording the correct amount of income for each employee, and since an employee’s pay involves taxable benefits like the items listed above, these need to be included. Once you’ve found the true amount of income, you can more easily determine the amount that is subject to source deductions.

That brings us to deductions. The three main items generally deducted from all of your employees’ pay are:

  • Income tax;
  • Canada Pension Plan (CPP) contributions; and
  • Employment Insurance (EI) premiums.

Now, let’s take a closer look at each item.

Income Tax

The amount of income tax an employer is responsible for deducting from an employee's paycheque must align with the province or territory in which that employee works. You can use the Canada Revenue Agency’s Payroll Deductions Online Calculator or access this same information through the Canada Revenue Agency’s Payroll page. 

Canada Pension Plan (CPP) Contributions

The rule of thumb here is that CCP contributions must be deducted for all employees if:

  • They are between the ages of 18 and 70;
  • They are in pensionable employment;
  • They aren’t disabled.

For information about specific rates, look at the Canada Revenue Agency’s website. 

Employment Insurance (EI) premiums

An employer must deduct EI premiums in relation to each employee's pay. Once an employee maxes out for the year, you can stop making this deduction. There are tools available to help you calculate this rate. 

Make the most of the resources available to help

While this all may be a bit confusing and seem overwhelming at first, be sure to use resources available to help you navigate the murky payroll waters. The Canada Revenue Agency’s Payroll Deductions Online Calculator can help you determine things like the amount of EI insurance you need to deduct while they also provide tables for your reference.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Service Provider, Canadian Payroll, Canadian Payroll Deductions, Payroll Tips, Payroll Service, Payroll, Employee Payroll Deductions

Employee Payroll Deductions Every Business Needs to Make

Posted by Ray Gonder

|

Apr 26, 2013 2:28:00 PM

employee payroll deductions every business needs to makeYour responsibilities as a business owner or human resources manager are vast. You keep your business humming along, find new clients, hire employees, and maintain good relationships with your customers and vendors. But even though you have many different hats to wear and many different details to pay attention to, you must pay attention to the finer points of your payroll if you want to be compliant with the CRA and avoid costly fines.

One aspect of payroll that may seem confusing is employee payroll deductions. These deductions are made for each employee during every pay period, and the funds must be remitted to the CRA. Let's take a look at each deduction to see what you need to do.

Income Tax

Canadian employers are required to deduct income taxes from their employees' paycheques. To determine how much income tax to deduct, refer to the tables for the territories or provinces where the employees report to work. Provinces and territories have different rates, so it's important to use the correct table. Also, make sure you're using the most recently published table for your province or territory. Note that income tax is deducted from all employees' paycheques, regardless of age. 

Canada Pension Plan (CPP) Contributions

The CPP is a social insurance program based on workers' earnings, and the law states that all employed Canadians over the age of 18 and under the age of 70 must contribute a portion of their earnings to it. Residents of Quebec participate in an equivalent plan, the Quebec Pension Plan (QPP). Your responsibility as an employer is to use the Canada Pension Plan (or Quebec Pension Plan) tables and deduct the appropriate amounts from each employee’s paycheque.

Employment Insurance (EI) Premiums

Canada's Employment Insurance (EI) program provides temporary financial help to Canadians who have lost their jobs. The program also provides assistance to people who are ill, pregnant, or caring for a newborn. As an employer, you deduct EI premiums from your employees' paycheques until they have reached the yearly maximum. In addition, as the employer, you also contribute 1.4 times the premium for each employee. Once the total yearly maximum has been reached, you stop deducting EI premiums from your employees' paycheques. You can use the CRA's online deduction calculator to determine how much to deduct for each employee.

The CRA can assess a penalty of up to 20% if your remittance of these deductions is late. If all of this seems like more than you'd like to take on, an outsourced payroll service like The Payroll Edge can help you. A professional payroll service can completely take these tasks off your hands. They are always abreast of changes in the tax code, so you don't have to take any risks. Additionally, they have the systems and experts in place to make payroll a breeze, leaving you time to run your business.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Service Provider, Outsourced Payroll Service, Payroll Tips, Payroll Service, Payroll, Employee Payroll Deductions, payroll provider, Payroll Deductions

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