Payroll sounds like an administrative afterthought until you actually run it — then it's deadlines, remittances, and a T4 slip you're personally responsible for getting right. Here's the cycle, plain and simple.
The Payroll Cycle
Calculate
Gross pay — hours or salary, plus bonuses or taxable benefits.
Withhold
CPP, EI, and income tax deducted before pay reaches the employee.
Remit
What's withheld, plus your employer share of CPP and EI, sent to CRA on schedule.
Report
T4 slips issued to employees and CRA by the end of February.
Before Your First Paycheque
- Open a payroll program account with CRA — an "RP" account attached to your Business Number
- Have each employee complete a federal and provincial TD1 form so withholding is accurate from day one
- Decide your pay frequency (weekly, biweekly, semi-monthly, monthly) before your first run, not during it
Employee or Contractor? Get This Right
One of the most common — and costly — small business mistakes is treating someone as a contractor when CRA would consider them an employee. The distinction comes down to things like who controls how and when the work gets done, who owns the tools, and who carries the financial risk. Get it wrong, and you can be on the hook for years of back remittances, penalties, and interest — discovered well after the fact.
Remittance Schedules
Your remittance schedule — regular, quarterly, or accelerated — depends on how much you withhold on average: the more you withhold, the more frequently CRA expects payment. Most new employers start on the regular schedule. A missed remittance date is one of the most consistently penalized mistakes in the entire system — interest and penalties begin immediately and compound from there.
When to Bring In Help
- You're managing more than a couple of employees with varying pay structures
- Commissions, bonuses, or taxable benefits are part of the mix
- There's any uncertainty about a worker's employee-vs-contractor status
- You've already missed a remittance date once