One of the most challenging aspects of business management relates to personnel oversight and, above all, payroll issues.
Luckily, we at JTT Accounting offer the best payroll services in Canada to help alleviate many of the burdens associated with calculations, compliance, and payment schedules, in exchange for highly competitive fees. We’ll also be able to streamline the rocky process of dealing with the statutory demands set out by provincial and federal authorities, so you won’t have to face onerous penalties or perform time-consuming administrative errands.
Payroll Services (In Canada) Done Right!
When owning a small company, the need for a payroll service may seem like overkill. As your company expands, however, you will be having trouble keeping up with accounting tasks, tax reports, and administrative paperwork, let alone managing your staff and improving your marketing strategy.
In recent times, the need for specialized payroll companies in Canada has increased exponentially, mainly in light of the demands set out by the regulatory agencies and the increased personnel costs, prompting the interest, on the part of businesses, in outsourcing certain tasks to meet yearly budget goals.
Also, labor law has evolved in great strides during the past few decades, therefore requiring employers to undergo several adaptations in their staff management approach to meet the new legal injunctions, a fact that would undoubtedly place more burdens on the part of HR departments across Canada and beyond.
The JTT Accounting team is well aware of these complexities, which is why we strive to remain always updated with the latest regulations and advancements in payroll management to ensure absolute compliance with labor authorities and foster an amicable working environment for our customers.
How Can A Payroll Service Provider Help?
Payroll involves much more than the mere act of paying workers on time and correctly. This pertains only to the core concept of what payroll is.
If you’re just getting started in the business world, a competent payroll service provider like JTT Accounting will be endowed to guide you through all the steps of managing payroll. Let’s explain them in more detail.
Opening a payroll program account
You’ll first need to apply for registration with several government agencies. This includes the following:
1. Acquiring a CRA Business Number
When you fill out the form provided by the Canada Revenue Agency (CRA), you’ll be asked to choose certain services, including opening a payroll account.
You don’t have to fill out the form if you are already in possession of a BN. Instead, you can ask the CRA to simply add the payroll program account service to your already existing business account.
This step is required in order to remit the necessary statutory deductions, including employment insurance, income tax, and the CPP (Canada Pension Plan).
For incorporation in Quebec, you’ll need to obtain a Quebec Enterprise Number (NEQ).
2. Setting up the Employer Health Tax (EHT) remittance
On a Provincial level, you would have to register with a specific provincial finance ministry, depending on the regulations set out by the different regional authorities.
This Employer Health Tax remittance may sometimes incur fees according to the province’s statutes (also called “payroll tax” or “health tax”). Ontario, for example, charges from 0.98% to 1.98% of your payroll, and you’ll be taxed with a different percentage within that range, relative to your payroll size. Other provinces, such as Quebec and British Columbia, require similar obligations.
Some provinces, like British Columbia, provide employers with a handy health tax calculator to ascertain beforehand what they would expect to pay yearly based on the estimates projected on their payroll budget.
3. Funding workers’ compensation board (WSIB or WCB)
Both the Workplace Safety and Insurance Board (WSIB) and the Worker Compensation Board (WCB) refer to roughly the same type of organization, albeit naming conventions will vary by province. These boards grant insurance plans for health issues and injuries procured while on the job.
These employer-funded organizations aid whenever an injury or health emergency occurs. They may offer support by means of medical coverage, wage-loss compensations, and other similar measures aimed at encouraging reincorporation to the workplace. Other support options include survivor benefits and counseling.
These WCBs will request employers to pay an amount on monthly premiums. This amount may differ in attention to the nature of the business and the industry sector in which it’s immersed. The hazards involved in the labor will respectively increase the cost of premiums.
Paying an additional levy or tax could appear too cumbersome for any Canadian business. Notwithstanding, the premiums actually work in favor of employers, for they won’t have to cope with hefty medical bills for grave work injuries, as well as the hardships that would result from them.
Thus, the function of these compensation boards is two-fold: Protecting the employer financially in the event of an injury, and notifying the employees of the coverage they’ll receive if they get hurt while doing their job.
At JTT Accounting, we are glad to cooperate with startups and to counsel them concerning all the intricacies linked with getting a compliant payroll account prepared and set, all in conformity to the legal demands outlined above.
Now that we’ve dealt with all the administrative errands (at least for now) let’s dive into some details regarding our payroll routine.
Defining payroll frequency
Determining the payroll frequency will affect how your company’s cash will flow, as well as how attractive your job offers will be. The importance of this decision is often underrated on the part of many business owners.
Likewise, you’ll benefit a lot from abiding by a consistent payment schedule. In most instances, employers pay their workers on a biweekly basis (namely, every two weeks). Others prefer to pay monthly salaries to their staff.
This decision primarily hinges upon the nature of the enterprise and its cash-flow cycles. Some employers would rather pay in arrears, as in, for work completed during previous pay periods, a modality which would require some form of fine-tuning on your payroll options.
In this regard, we need to stress the importance of hiring a competent payroll company in Canada that can help in keeping up with the set payment schedule. That way, you won’t ever miss a payday, effectively avoiding all the detrimental effects that would have on your working environment and the staff’s morale.
These are some of the most common examples of payroll frequency options.
- Weekly: The standard for small local businesses that hire short-term hourly workers.
- Biweekly: It’s the default payroll option for most workplaces due to being one of the most manageable payment schedules, regardless of the type of contracts signed.
- Semi-monthly: This one can get confused with the bi-weekly option (considering that 2 weeks make up roughly half a month). However, paydays in this case are scheduled specifically on the 15th and 30th of each month. If you have hourly workers in your staff, it can get a bit tricky, for the working hours are usually calculated in the span of a month.
Deciding how to process the payroll
There are two basic processing methods. You can either hire a part-time accountant for this process or go through the company’s CFO (in-house payroll), or rather, you can outsource this responsibility to a third-party payroll service provider.
When you place this delicate task in the hands of your internal staff, you need to make sure that the staff is aware of all the regulatory baggage that is usually attached to these matters, aside from supervising that payments are done in a timely fashion.
We already touched upon the vicissitudes that may ensue from delays in payments, which, at times, can lead to major concerns in the workforce, even to the point of having workers organize strikes. with subsequent damages to the company’s image and economy. But, we digress.
Conversely, choosing a competent firm to perform payroll services could benefit small, medium, and even large businesses, both legally and financially. For one, they would not have to deal with the expensive costs associated with waged Human Resources personnel. On the other hand, they can count on a specialized third party that specifically deals with these issues and has the necessary expertise and pedigree to perform these tasks with due diligence.
Another advantage of hiring qualified third-party providers for payroll processing is the compliance-laden approach they employ, as is the case with firms such as JTT Accounting.
When it comes to the legal aspects of payroll management, JTT Accounting will assume the bulk of the burden, all the while making sure you avoid uncomfortable tensions with the workforce due to payment delays.
JTT Accounting will likewise supply you with year-end reports, Records of Employment (ROEs) for submission to the CRA, T4s, and a myriad of statistics, so that you can have a full overview of all the work undertaken in the context of your business’ payroll management.
Gathering the pertinent information for processing payrolls
Moving on to the next step, your employees must then provide all the relevant data needed for the company to be able to process the payroll correctly. Your payroll processor (either in-house or third-party) will need to be fed the following information from your staff:
- Full name that matches the name of the bank account holder
- Updated residential address in Canada
- Date of hire and birth
- The amount to be wired or deposited (encompassing wages, salaries, and bonuses)
- Whether the worker is salaried or hourly.
- Social Insurance Number (SIN).
Apart from the required information described above, all employees must fill out Form TD1 issued by both federal and provincial tax authorities for the purposes of determining the amount of tax to be deducted from employment income. Both forms are issued individually and must be submitted to the corresponding agencies.
If you opt for using a service provider or you decide to additionally issue direct deposits and benefits, the CRA will demand the following information:
- Type of employee (whether he/she is part-time, full-time, salaried, hourly, etc.)
- Residential phone number
- Preferred language
- Banking information
- Employee number
- Charity deductions
- Benefit eligibility date
- Vacation accrual per pay period
- Standby pay
- Vacation allowable overdraw or carryover
- Internal department codes and names
- Pension and RRSP deductions
- Tax reduction at source
As you can probably gather, this amount of information can be a bit overbearing, but JTT Accounting will walk you through every requirement so won’t have to suffer trying to figure it all out by yourself.
We’ll also act as middlemen between the tax agencies and our customers to make sure there are no loose ends on either side. We at JTT Accounting are more than equipped to handle and file the aforementioned paperwork and to facilitate all the pertinent documentation to employers, employees. and tax bureau respectively.
Making the necessary payroll deductions
The deductions comprise an estimated portion of your employees’ employment income that would have to be handed over to the Canadian tax authorities, both provincial and federal. This deduction needs to be remitted to the CRA by the employer or intermediary, as well as the corresponding contributions to the Employment Insurance premiums and the Canada Pension Plan.
These statutory deductions are made based on the information that the employee provided through the TD1 and TD1ON forms. The employer is also in charge of reporting these income deductions for the employees’ T4 and T4A slips and filing the information return to the CRA before the last day of February of the following year. Penalties for not filing the information return on time can range from $10 to $75 per day passed outside the legal time window (up to 100 days).
You’re able to remit these deductions through paper vouchers or electronically. If you opt for the latter, the statements and transactions can be viewed on your “My Business Account”, accessible from the CRA portal.
The aid of a liable payroll service provider will agilize these procedures so that you won’t be surprised by costly fines. Moreover, JTT Accounting will always be there to troubleshoot and smooth out any rough edges in your correspondence with tax authorities. All the calculations and bookkeeping will be performed by our highly-trained staff.
Completing the T4 slips and information returns
This is basically one of the last stages of payroll management. In it, the employer ought to fill out a T4 slip for each staff member every year, as well as the T4 summary form. Then, he/she should file the T4 information return and hand over the T4 slips to the personnel. The T4 slips can be filled out telematically for the sake of convenience.
All of this documentation, as well as the rest of your business records, must be safeguarded in an accessible storage area of your business or home address.
For all these purposes, having the assistance of a diligent payroll company like JTT Accounting is key to ensuring that all this documentation is duly completed, filed, and properly stored. You can also have the documents physically and digitally organized and accessible on demand for any given occasion or in the event of an inspection.
Get Help From Some Of The Best Professionals
You may have noticed how convoluted payroll management can be, owing to the complex statutory framework under which it operates. As a businessman, you’d probably want to spend more time trying to expand your venture rather than having to deal with these tedious matters, which is why you can rely on JTT Accounting for handling all these cumbersome tasks at very reasonable fees.
Our payroll services are catered to businesses of all sizes and industries established across Canada, with personalized customer support, counseling, and innovative tools to make your business management easier.