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Is Your Canadian Small Business Adhering to Government Payroll Standards?

Posted by Karen McMullen

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Nov 22, 2013 9:00:00 AM

Is Your Canadian Small Business Adhering to Government Payroll StandardsOne of the most important, and challenging, aspects of running a small business is maintaining compliance with payroll regulations. Federal and provincial payroll regulations are incredibly complex, and affect everything from reporting requirements to how pay statements are structured. Understanding and applying all of these payroll regulations correctly is time consuming, and there is no room for error. Simple mistakes can lead to financial and legal problems that can cost your business a fortune. Maintaining compliance isn’t easy, and requires an investment of time, effort, and money.

Reporting and Remittance

Payroll regulations governing employee withholdings and employer contributions can differ depending on the type of business you operate and the employees you hire. Dates for remittances also vary, depending on your previous average monthly withholding amounts (AMWA). As your business grows or shrinks, the reporting dates and requirements can change significantly. If you’re handling payroll yourself, keeping up with all of these changes is your responsibility. Late or incorrect remittances can lead to audits, fines, and back payments.

Piles of Paperwork

Accurate documentation is often your only defence in an audit. The CRA recommends that you keep payroll records for 36 months, though they are not limited to a 36-month period for audits. To be on the safe side, you need to make sure that all of your timekeeping and reporting records are up to the latest standards. All of your documentation that contains employee information must be stored in a secure location, for your protection and the employees’. Upon request, any and all documentation must be turned over to the CRA or other authorities for examination.

Employee Classifications

Payroll regulations can also vary widely, depending on the types of services you’re paying for. Like many businesses, you may employ non-citizens, visiting workers, interns, and independent contractors. Each class has different reporting requirements, making it necessary to set up different pay schemes for different employees. You also have to be aware of payroll regulations that can affect an employee’s classification. Failing to adhere to the regulations could turn an independent contractor into a full-time employee—leaving you on the hook for past remittances and payments. Each classification has its own rules and regulations, adding another layer of difficulty to handling payroll.

Always Learning

Perhaps the most difficult aspect of payroll regulations is their constant evolution. These rules change from year to year, if not more frequently. The application of these rules can change from one government agency to the next. Having an understanding of these regulations one day is no guarantee of the same understanding the next day. The only way to assure constant compliance is through constant training and practice. Whoever is handling your payroll must be able to attend training seminars and conferences, read legal texts, meet with government officials, and practice all the things they’ve learned. Even small gaps in their knowledge or experience can prove costly.

Hassle-Free Compliance

An outsourced payroll provider offers an easy way to avoid these problems. They make it their business to stay up to date on changing regulations, and to incorporate those changes into their regular routine. Employees at a payroll service receive constant training, as well as constant experience in applying that training. They frequently interact with auditors and agents, so they know how the laws are actually being applied, versus how they’re written on paper. All of this knowledge and experience helps them avoid compliance issues, and successfully defend businesses that are accused of compliance lapses. When you factor in the associated costs of training, software, legal representation, and possible fines, payroll service providers are an affordable, reliable alternative.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Regulations, Employee Payroll Deductions, CRA, CRA Compliant, Small Businesses Payroll, Small Business Operations

5 Ways Using a Payroll Service Makes Sense

Posted by Stacey Duggan

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Nov 6, 2013 9:00:00 AM

5 Ways Using a Payroll Service Makes SenseMany small business owners start out handling payroll on their own. As their company grows, it becomes increasingly difficult and time consuming to keep up with payroll. By that time, the company usually has some kind of HR manager or administrator, and they often inherit the payroll responsibilities. They become a default payroll manager, regardless of whether they have the training and experience to handle the needs of a growing company. This takes away from their HR responsibilities, and puts your payroll in the hands of someone who may not be able to dedicate the necessary time to do it right.

Instead of handing off your payroll needs from one employee to the next, it makes more sense to hire a payroll service. Payroll providers have the training, experience, and knowledge to handle the payroll needs of any size company. A payroll provider lets you and your staff stay focused on the business at hand, while your payroll needs receive the attention they deserve. Here are five ways that hiring a payroll service makes sense for your company:

Counting the Minutes

Every minute you spend on payroll is a minute that’s not focused on your core business activities. As the hours add up, and you answer employee queries, and read up on the latest legislative changes, more productive pursuits are being delayed.

A payroll service deals with payroll needs every single day. They don’t have other responsibilities that consume their attention. They can handle your payroll needs quickly, efficiently, and accurately. You will be able to spend more of their time focused on growing your business.

Time is Money

By saving you time, a payroll service saves you money. They also save you money by ensuring that your payroll is handled right the first time. Mistakes in payroll can be expensive. Cutting new cheques, making back payments, and government fines can quickly add up. The easiest way to avoid all of these potential expenses is by using a payroll service provider.

Focus on Service

When someone in your company handles payroll, they can’t always give immediate attention to questions or concerns. If you have a problem, you either have to interrupt the payroll manager, or wait for them to get back to you.

With a payroll service, they’re always working on payroll. When you call with questions or concerns, that’s just another part of what they do every day. Since they handle customer queries all the time, they can have the right answer for you right away. 

Get it Right

A lot of payroll mistakes can be traced to ignorance of changing legislation. Even when the legislation doesn’t change, it can be incredibly complex. Your payroll manager may not have the time to research all of the intricacies of the law, let alone keep up with the constant changes.

A payroll service understands the laws, as well as their application. They often participate in crafting new laws, so they have a deep understanding of the issues. Keeping up with changes is part of their day-to-day routine. This makes it easy for them to avoid mistakes that can lead to fines and back payments.

Expert Guidance

As your business grows and changes, you’ll need advice on future payroll issues. It’s unlikely that your payroll manager will have the experience to help guide that growth.

A payroll service handles clients of all sizes and stages of growth. This gives them unique insights into the challenges faced by businesses. This insight can prove invaluable in helping you steer your company into the future.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Service Provider, Outsourced Payroll Service, Best Payroll Calculator, Payroll Deductions, Dependable Payroll Service, Payroll Tax Laws in Canada, Great Payroll Service Provider, Small Business Operations, Small Business Payroll

How to Do Small Business Payroll in Canada

Posted by Ray Gonder

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Jul 26, 2013 10:30:00 AM

Small Business Payroll in CanadaSetting up a small business requires an incredible amount of attention to detail. You need a business development program, a place to work, a marketing strategy, and financing. Each of these tasks will affect the way your business runs and whether or not it will be successful. As soon as you hire employees, you also need to learn how to set up systems and policies for your payroll. Although payroll may seem like a simple, relatively unimportant task in the big picture of your business, it's critical to your business' functionality and compliance with the law.

To break down the intricacies of Canadian payroll, let's take a look at small business payroll in six steps.

1. Opening your CRA payroll account.

One of your first orders of business as a new small business owner is to acquire a Business Number and open an account with the Canada Revenue Agency (CRA). You can open your account by going to CRA's Business Registration Online or by sending an application to the CRA by mail or fax. After you've finished your registration, the CRA will mail you a confirmation letter that contains your business and payroll account number, and you can commence operating your payroll.

2.  Opening up a Worker’s Compensation account.

Different from the US, every Canadian worker is covered under the government worker’s compensation program.  Each province has their own premiums and rules surrounding these accounts as well as different remittance cycles from the schedule set up for your payroll account. What rate group your workers fall into depends on the type of work and province as well. A small business owner should have an understanding of these rules, rate groups and remittance schedules so they can be assured that they are not over or under paying premiums.

3. Calculating Deductions.

One of the more mundane jobs as a small business owner is calculating deductions from your employees' paycheques. Each time you run payroll, you will calculate CPP contributions, EI premiums, and income tax deductions based on the amounts you pay your employees. In addition, you also must calculate your (employer's) share for each of these deductions. As well as the payroll deductions, you must calculate your worker’s comp premiums to be paid based on each employees pay.  To further complicate the calculating of deductions, certain tax groups have minimums and maximums that you must track.  For example in Ontario you do not have to remit Employer Health Tax until you have reached a payroll of $400,000. For the Canada Pension Plan you no longer deduct this tax once the employee has reached the maximum to be deducted.

4. Remitting Payroll Deductions.

Based on the schedule assigned to you by the CRA and the provincial Worker’s Compensation Board, you must remit these taxes on time or face the accrual of interest and fines for late payments. Don’t forget that these schedules can be very different and forgetting a deadline is not an excuse the various government bodies will accept.

5. Providing Employee’s Paystubs.

Each time you pay an employee you must provide them with a paystub outlining the gross amount, deductions taken broken down by tax type, and any other additions or deductions taken from their pay.  Most employers also show the ongoing year to date totals of gross pay, taxes paid and net pay.  As well as all of these, most paystubs will show the employee their vacation accrual as well.

6. Filing Information Returns.

Each February, you have a responsibility as an employer to complete and file T4 Summaries and T4 Employee Slips for income tax purposes. Each of your employees should receive a T4 Slip from you that accurately states the total amount of CPP contributions, EI premiums, and income tax deducted from their paycheques for the entire previous year. The T4 Summary is a total of all the amounts reported on your employees' T4 Slips, and it's submitted either electronically or physically to the CRA.

As you can see, payroll is an important part of any small business' operations. If you're overwhelmed with the meticulous, ongoing nature of payroll, or if you are a US company unfamiliar with Canadian payroll rules and regulations, consider outsourcing payroll processing to a third party to save you time and allow you to focus on other aspects of your business.

7 Signs It's Time to Outsource Payroll

Topics: Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Payroll Service, Worker's Compensation, Canada Revenue Agency, Small Business Operations, Small Business Payroll

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