Payroll FAQs for Small Business Owners

Is it Mandatory to Set Up a CRA Payroll Account?

Yes. If you hire and pay employees, setting up a CRA Payroll Account is mandatory. What if you hire employees before setting up the account?

You’ll still have to set it up as soon as possible and remit deductions by the due date. Otherwise, you’ll face penalties. 

How Do I Set Up a Payroll Account with the CRA?

First off, check if you have already registered for the account. It’s possible you already registered when you signed up to receive your business number. 

Otherwise, you can set up a CRA Payroll Account in two ways: over the phone or online.

1. Call the CRA at 1-800-959-5525 on weekdays between 9 a.m. to 6 p.m.to sign up for an account. 
2. Visit the CRA’s payroll registration page. 

Before you sign up, ensure you have the following information: 

• First pay date for employees
• Pay frequency 
• Number of employees
• Months covered in payroll
• Payroll service name
• Parent company or franchise information, if any

What Happens if an Employee Only Works for Part of a Pay Period?

Say your pay period is two weeks, and your employee only works for five days. To prorate their salary, you’ll have to determine their daily rate. Assuming your employees only work Monday to Friday, you can take their salary and divide it by 260. 

For example:

Salary: $60,000

Daily Rate: 60,000/ 260

= $230.77

5-day pay: 5 ($230.77)

= $1,153.85

Can I Pay Employees Without a SIN?

According to the CRA, all businesses must make a reasonable effort to obtain employee SINs within three days of their hire date. If you don’t, you’ll face a penalty. However, an employee without a SIN isn’t an excuse to avoid remitting deductions. You’ll still have to file a T4 information return. 

Do I Have to Pay CPP and EI?

Yes, all businesses must pay CPP contributions and EI premiums for every employee. Additionally, you must deduct CPP and EI from employee wages and remit them to the CRA. 

However, a few exemptions apply. Family members working for your corporation might not be considered as having insurable employment, thus exempting them from EI premiums. Indigenous employees are exempt from CPP contributions. 

What Is the Penalty for Late Remittance Reports?

The CRA charges the following penalties for late remittance reports:

• 3 days late: 3% 
• 4-5 days late: 5% 
• 6-7 days late: 7%
• Over a week late or failure to remit: 10% 
• Late remittance two years in a row or proof of negligence: 20%

7. How Do I Know What My Employees’ Tax Exemption Amounts Are?

Your first step in determining tax amounts is to obtain employee Federal and Provincial TD1 forms. Check Line 13 to find the tax exemption amount. 

Do I Pay Indigenous Employees the Same Way As Other Employees?

No. Indigenous employees have exemptions that distinguish them from regular employees. Refer to the CRA’s website for more information. 

Do I Have to Integrate Payroll with my Accounting Software?

You don’t have to, but it would certainly make things easier. Both Wagepoint and Knit have an integration service where you can integrate data from Quickbooks, Xero and other accounting software: 

Why Outsource Payroll Processing Services?

At first glance, keeping payroll internal might feel more affordable. But that’s not always the case, especially if you’re a relatively new business. You might not have the budget to hire an in-house bookkeeper. OK, so why not manage it yourself? Unless you have the expertise, you’ll need to carve out valuable time to manage payroll properly. Mistakes will be costly. 

Here are a few benefits of outsourcing payroll management services: 

• Efficiency: As a new or seasoned entrepreneur, you don’t have the resources to spend hours learning about payroll and ensuring accuracy. Outsourcing ensures that only experts handle your payroll and manage it efficiently. 

• Compliance: Do you know all of the CRA’s rules regarding payroll compliance? Of course, the information is out there. All you have to do is sift through hundreds of web pages with accounting jargon. Or, you can rely on bookkeeping experts with stellar reviews to ensure compliance for you. 

• Ease of reference: Need a receipt or tax form? Payroll software will help you retrieve it in seconds, and a virtual bookkeeper can promptly answer any questions you have. 

• Affordable: Outsourcing gives you access to professionals in different jurisdictions and thus different average pays. Meaning? You can procure the services of professional bookkeepers at more competitive costs than you can in your home city. 

• Secure: The best payroll software systems all place a high priority on security. Both Wagepoint and Knit use SSL encryption and allow you to force all users to use Two Factor Authentication, which we highly recommend to keep your data the most secure.