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4 Reasons Small Businesses Should Outsource a Payroll Service Provider

Posted by Karen McMullen

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Apr 17, 2015 9:00:00 AM

4-Reasons-Small-Businesses-Should-Outsource-a-Payroll-Service-ProviderDid you know that more than 85% of Canada's certified public accountants recommend that small businesses outsource their payroll?

When one considers all the advantages that outsourced payroll services can offer to a small business, this figure isn't surprising. Compared to internal payroll and bookkeeping, outsourced payroll is more time-efficient, cost-efficient, and more beneficial to your enterprise overall.

Still not sure if your company should look into outsourcing its payroll to a Canadian payroll service provider? Here's a more in-depth look at all the ways a payroll provider can benefit your small business.

1. Expertise

Many small business owners know how to do business, but they aren't necessarily experts in payroll. When you outsource your payroll to an external agency, you and your employees' paycheques will be managed by people who make their living by being experts in the complexities of payroll. Because of this, you can be confident that your payroll and taxes will be processed accurately and without error every time.

2. Cost-efficiency

Studies have shown that small businesses will spend approximately $2,600 in direct labour costs each year that are related to their payroll. That doesn't include the cost of paying the salary of a full-time, in-house payroll employee. By outsourcing your business's payroll, these costs will be slashed almost entirely, allowing your business to put more of its budget toward growing, rather than stagnating.

3. Time-efficiency 


Another huge advantage that outsourced payroll services can offer is time savings. Attending to payroll internally requires a huge time commitment, as making errors can be disastrous. By allowing an outside agency to handle your payroll, you and all your small business's employees can devote more time to the core mission of your business, generating more revenue, and being more valuable members of the enterprise.

4. More than just payroll processing

Processing payroll for less time and money is obviously a major advantage of outsourcing your company's payrollbut many of today's outsourced payroll processing providers offer even more services that can benefit your company. One of these indispensable services is human resources support. Your payroll processing provider will be able to offer the guidance and expertise needed to handle any issues that arise with employees, allowing your in-house human resources department to devote more time to resolving non-payroll-related issues.

 

7 Signs It's Time to Outsource Payroll

Topics: Payroll Service Provider, Small Businesses Payroll

Employing Canadian Workers? Our Business Taxes Can Be Quite the Pain!

Posted by Stacey Duggan

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Aug 7, 2014 8:35:00 AM

Business and Payroll taxes can be a pain for U.S. based companiesEmploying Canadian workers and deducting the correct Canadian payroll taxes from their paycheques can be difficult if you’re an American or foreign company outside of North America. We’ve compiled a list of Canadian taxes a company employing Canadian workers should be aware of, if they are not engaging with an Employer of Record service.

Canadian Business Taxes

All Canadian businesses must file a corporate tax return with the Canadian government. This corporate tax return is due within the six months after the end of the company’s fiscal year.

If you are engaging with Canadian companies for the sale of your product or service you need to be aware of the sales tax for the province you are doing business in. For goods and services sold in Canada, every company must charge the applicable provincial sales tax. The same is true in the reverse, if you purchase goods and services in Canada, you will be charged the sales tax. You are then required to reconcile these debits and credits to pay or report to the Canada Revenue Agency. Every province has a different rate and the remittance schedule can vary as well based on company size. In Ontario, it is called the HST (Harmonized Sales Tax) and the rate charged is currently 13%, in Alberta that rate is 5% for their GST (Goods and Services Tax). For a full list of HST/GST rates by province, please visit the Canada Revenue Agency’s website.

Another tax to be aware of as a foreign company is the possibility of the 15% withholding tax. If a U.S. or foreign company chooses not to register a Canadian business presence but does engage in a sales transaction with a company in Canada, that company must withhold and remit 15% of any payments for services rendered in Canada.

Canadian Payroll Taxes

Some taxes are consistent for all employers across Canada such as the Canada Pension Plan (CPP), Employment Insurance (EI) and Worker’s Compensation.  These taxes may be consistently seen across all provinces and territories but the rate that they are charged can vary.

Other taxes are province or territory specific. For example, in Ontario employers must pay the Employer Health Tax (EHT) and in Quebec there are three additional taxes over and above the federal ones. Please visit the Canada Revenue Agency’s website for further information on provincial payroll taxes and rates.

If you have not engaged an Employer of Record here in Canada and have successfully registered your business, enrolled for the various government accounts and are up to date on your taxation responsibilities, you may be ready to hire your first employee.

If you’d prefer to have an Employer of Record handle the complexities of Canadian employment law, contact The Payroll Edge today and we’ll take care of the workforce compliance issues for you! 

7 Signs It's Time to Outsource Payroll

Topics: Payroll Tax, Payroll Tax in Canada, Employee Payroll Deductions, CRA Payroll Tax, Payroll Deductions, Calculating Taxes in Canada, Employee Payroll Tax, Small Businesses Payroll

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

How to Do Payroll in Canada

Posted by Ray Gonder

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Jun 25, 2013 11:49:00 AM

How to do payroll in Canada 2If you were hoping that cutting cheques would be the sum total of your payroll responsibilities, you're in for a surprise. Canadian payroll is a bit more complicated than that. It can be challenging for US-based companies to adapt to payroll methods and guidelines in Canada, since the laws and regulations are quite different. It can also be difficult for new small businesses to get the hang of payroll responsibilities, especially when they're dealing with all the other details of running a small business. To help you get your bearings, we've put together a short (but not comprehensive) list of payroll tasks that you'll be responsible for.

Remittances

Calculating deductions and benefits contributions is time-consuming and tedious because you have to calculate each employee's individual deductions depending on their wages and province of work. Once you've done all of this paperwork, however, you're not done. You still need to remit the deductions and contributions to up to three separate government agencies, which each have their own due dates. If the remittances are not submitted properly, you could be fined.

Year-end Requirements

Your ongoing payroll responsibilities should be accurate throughout the year, but at the end of the year, you're also charged with reporting to tax authorities about the filings made by your company. These filings are from both the employee and employer perspective of taxation. You must also fill out T4 forms for each of your employees with an understanding of how to report certain things like commission and non-taxable earnings.

Employee Inquiries and Ongoing Legislative Changes

Payroll isn’t just paying someone an hourly wage x the hours they work. It’s much more complicated than that. There are taxable and non-taxable earnings, employer and employee benefit contributions, overtime, taxation maximums, vacation, and many, many more variations to consider. Add to that the fact that payroll legislation is a moving target and can change without notification. Managing payroll can be a confusing, time consuming task.

Your employees expect that they are to be paid correctly and on time. A paycheque is at the core of why they are working for you and is continuing incentive for them to do their very best to keep your company productive. Not being able to provide a regular, correct pay or to answer their payroll questions correctly can cause any employee to become disgruntled.

At The Payroll Edge, we can manage the above tasks for you and more. Our payroll experts are always on top of the latest tax-related legislations. They will field your employees' questions and guarantee that your payroll will be done accurately and on-time.

In addition, we offer premium human resource services as well, which can lighten your load considerably. These services include workplace injury claims management; consultation for employee review, conduct, termination, and layoff; and employment agreements, which protect your from legal action.

We know that you're an expert at what you do, but most likely, you're not a full-time payroll specialist. That's where we come in. We have over 25 years of experience with Canadian payroll. We know the ins and outs of the Canadian payroll, and we process over 5,000 pay cheques each week for companies in all Canadian provinces. If you'd like to spend more time focusing on your business and less time dealing with tedious paperwork, give us a call. There's real peace of mind that comes with knowing that your payroll is always taken care of by experts. Instead of staying up late the night before payroll is due every couple of weeks, you can continue to focus on doing what you do best: running and growing your company.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Payroll Tax Calculations, Canadian Payroll Service, Best Payroll Calculator, payroll solution, Payroll Deductions, Great Payroll Service Provider, Small Businesses Payroll, Payroll Expertise

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