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What You Need to Know about Setting up Payroll for a Small Business in Canada
Let’s face it: there’s no simple part about starting and running a small business in Canada. Whether you’re a one-person team or are slowly expanding your operation, challenges and opportunities are likely ample. But setting up payroll for your small business in Canada doesn’t have to be daunting. With proper anticipation, planning, and execution, you can successfully navigate payroll complexities.
With nearly five decades of combined experience, Leonard Tam Professional Corporation has guided numerous businesses through the labyrinth of small business challenges. While no two small businesses are alike, there are some similarities that are inherent to all businesses, no matter their space. Here’s what you need to know.
With nearly five decades of combined experience, Leonard Tam Professional Corporation has guided numerous businesses through the labyrinth of small business challenges. While no two small businesses are alike, there are some similarities that are inherent to all businesses, no matter their space. Here’s what you need to know.
1. Ensure All Information Is Accurate
Whether you’re the only employee, have a single employee, or a small-but-growing team, it’s essential that all information is properly recorded and updated regularly, including:
- Completed federal and provincial TD1 forms
- Mailing address and contact information
- Social Security Number
- DOB
- Bank account information
2. Determine How You’ll Pay
There are seemingly countless payroll software options out there now. Many companies utilize these, as they offer a much easier, cleaner experience when it comes to ensuring accuracy and details. Moreover, many software companies offer support or online tools and tutorials so you always have the resources you need if complications or questions arise.
While payroll software is quite common among small businesses in Canada, others less frequently opt for manual entry. This method may be beneficial for a company with elementary payroll needs, and only one or two employees. However, as with any manual data entry, human error may be more common.
3. Figure Out Frequency
Prior to registering your business for payroll, determine how often you’ll pay yourself and/or your employees. Bi-weekly and semi-monthly payments are the most common payment periods. It’s important to determine which works best for you and your employees. If your workers are hourly, then bi-weekly may make the most sense. For salaried employees, semi-monthly is often the most common method. Semi-monthly pay helps you avoid the two times per year that there are three payment periods.
4. Register Your Small Business for Payroll
This is essential. If your company does not have a business number, you must first obtain one. Once you’ve obtained a business number, you must then register for a payroll account with CRA. You may also register by completing an RC1 form.
When you register, you’ll need to input or relay the information included earlier in this post to ensure you are properly registered and can then run payroll.
When you register, you’ll need to input or relay the information included earlier in this post to ensure you are properly registered and can then run payroll.
5. Turn to Leonard Tam Professional Corporation
Setting up and running payroll for your Canadian small business is just one of many, many steps when operating a successful company. The team at Leonard Tam Professional Corporation can help you navigate the complexities of keeping your business running smoothly. Reach out to us today to learn more about how we can help you accelerate your business, or book a meeting with us.