Mastering Payroll Registration in Canada: A Step-by-Step Guide for Family-Owned Businesses

Running a family-owned business in Canada comes with many rewards, but also unique responsibilities—one of the most important being payroll management. Whether you’re paying family members, full-time employees, or part-time staff, proper payroll registration is essential to ensure your business stays compliant with tax laws and avoids penalties. Understanding how to navigate payroll can feel overwhelming, especially for small businesses that are just starting out.

In this blog post, we’ll guide you through the process of payroll registration and explain why it’s crucial for family-owned enterprises to comply with the Canada Revenue Agency (CRA). From setting up your payroll account to filing remittances and reports, this guide will simplify the steps needed to ensure your business operates smoothly and legally. By the end of this post, you’ll know exactly what you need to do to stay compliant and how to streamline your payroll processes for efficiency.

 

Who Must Register for Payroll in Canada

Payroll registration is essential for any business operating in Canada, including family-owned enterprises, to ensure compliance with the Canada Revenue Agency (CRA). Whether you hire employees within your business, or domestic workers like nannies or caregivers, registering for a payroll account ensures that all required deductions and remittances are handled correctly. Below is an in-depth explanation of who must register for a payroll account and the importance of doing so.

Criteria for Registering for a Payroll Account

1. Businesses with Employees (Including Family-Owned Enterprises) If your business employs anyone—whether it’s a full-time, part-time, or temporary employee—you are legally obligated to register for a payroll account with the CRA. This applies to all types of businesses, including family-owned enterprises. As soon as an employee starts earning wages or receiving benefits, the employer is responsible for deducting and remitting income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums.

For family-owned enterprises, this is particularly important, as it often involves hiring family members. Even if your employees are family members, such as children, spouses, or siblings, the requirement to register for payroll and remit the appropriate taxes still applies. Treating family members as employees in a formal way ensures compliance with CRA regulations and avoids complications down the line.

2. Employers Paying Salary, Wages, Bonuses, Tips, or Non-Cash Benefits Beyond just salary or wages, employers who provide any form of compensation must register for payroll. This includes bonuses, tips, commissions, and even non-cash benefits like company cars, housing, or other perks. These non-cash benefits are considered taxable by the CRA, and the employer must report and remit the appropriate taxes.

Family-owned businesses often overlook non-cash benefits provided to family members, but it is critical to account for these in payroll. Whether you are providing vehicles, accommodations, or other non-monetary compensation to family members who work for the business, these benefits must be included in payroll filings to stay compliant.

3. Hiring Nannies, Caregivers, or Domestic Workers If your family hires domestic workers, such as nannies or caregivers, you are also required to register for payroll and remit deductions for taxes, CPP, and EI, just as you would for any other employee. This rule applies even if the caregiver is working in your home rather than in a business setting. Nannies and caregivers are employees under CRA regulations, and their earnings must be treated as such for tax and remittance purposes.

Failing to register a payroll account when hiring domestic workers can result in significant penalties, including fines and interest on unpaid taxes or contributions. As a family business owner, it’s important to recognize that household employees require the same payroll compliance as your business employees.

4. Businesses Hiring Non-Resident Employees If your business hires non-resident employees—whether they are working remotely or coming to Canada temporarily—you are still required to register for payroll and remit deductions for taxes, CPP (if applicable), and EI premiums. For example, if your family-owned business expands and needs to hire international consultants or employees, payroll registration is a crucial step to ensure compliance with CRA regulations for non-resident workers.

Even if the employee does not live in Canada, you must register for payroll if they perform services for your Canadian business. The CRA has specific guidelines for how to handle payroll for non-resident employees, and registration is the first step to ensure proper deductions and remittances are made.

 

Importance of Payroll Registration

1. Avoiding Penalties and Interest Payroll registration is critical for avoiding penalties and interest charges from the CRA. Failing to deduct and remit taxes, CPP, or EI on behalf of employees—whether they are working in your business or your home—can result in significant financial penalties. The CRA imposes fines on businesses that fail to remit the correct amounts, and interest charges can quickly accumulate if payments are missed or delayed.

This is especially important for family-owned businesses, which often run on tight margins. Penalties for payroll non-compliance can quickly erode profits, making it essential to set up a proper payroll account and ensure that all deductions and remittances are handled correctly.

2. Ensuring Compliance with Employee Deductions Employers in Canada are required by law to deduct income tax, CPP contributions, and EI premiums from their employees’ pay and remit these amounts to the CRA. This applies not only to business employees but also to household employees, such as nannies and caregivers. Failure to do so will result in the employer being held liable for the employee’s portion of the taxes and contributions, which can lead to financial hardship for the business or family.

For family-owned businesses, this is especially relevant when hiring family members or domestic workers, as the temptation to treat them informally can lead to non-compliance. Registering for payroll ensures that all required deductions are made, protecting your business and personal finances from penalties.

3. Building Trust and Transparency with Employees Payroll registration helps maintain trust and transparency with employees, whether they are working for your business or your household. Employees expect their taxes, CPP, and EI contributions to be deducted correctly and remitted on time, ensuring their eligibility for important government benefits.

For family-owned businesses, this also applies when hiring family members. Treating family employees as legitimate employees, with formal payroll processes in place, fosters professionalism and accountability. This trust is also important when hiring nannies or caregivers, as they rely on your compliance for their access to government programs like EI or CPP.

4. Providing Access to Government Benefits By properly registering for payroll and remitting the required deductions, your employees—whether in your business or in your home—can access critical government benefits. This includes CPP retirement benefits, disability benefits, and Employment Insurance (EI) for cases of unemployment, illness, or parental leave.

For domestic employees like nannies and caregivers, proper payroll registration ensures that they can access these benefits, providing them with financial security. For your business employees, this helps build a sense of loyalty and professionalism. Registering for payroll ensures that your employees, whether family members or household workers, are covered by essential social programs.

In conclusion, payroll registration is a fundamental requirement for businesses and families alike in Canada. Whether you’re employing family members, hiring non-resident workers, or bringing on nannies or caregivers, ensuring compliance with CRA payroll regulations will help you avoid penalties, maintain transparency, and provide access to important government benefits. By registering for payroll, you protect both your business and your employees, reinforcing trust and professionalism in all areas of employment.

 

How to Register for Payroll: A Step-by-Step Guide

Registering for a payroll account in Canada is essential for businesses, including family-owned enterprises, that have employees or hire domestic workers, such as nannies or caregivers. Below is an in-depth step-by-step guide to help you navigate the registration process effectively.

Step 1: Confirm Business Requirements

Before registering for a payroll account, ensure your business has a Business Number (BN). The Business Number is a unique identifier for your business with the Canada Revenue Agency (CRA). If you already have a BN but no payroll account, you can add one to your existing account.

• What is a Business Number (BN)?
  The BN is a 9-digit number assigned by the CRA to identify your business for tax purposes. It is used across different tax accounts (GST/HST, corporate income tax, etc.).
• How to get a BN if you don’t have one:
  You can apply for a Business Number through the CRA’s online portal, by mail, or by phone:
  • Online: Register for a BN via the CRA’s Business Registration Online (BRO) at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/registering-your-business/register.html.
  • By Mail: Complete Form RC1, Request for a Business Number, and send it to your local tax services office.
  • By Phone: Call the CRA at 1-800-959-5525 to register for a Business Number.

Step 2: Register for Payroll via CRA’s Online Portal or by Mail

Once you have your Business Number (BN), you can register for a payroll account. There are several methods to do this:

1. Online Registration (CRA’s My Business Account)

• The most efficient way to register for a payroll account is through the CRA’s My Business Account portal at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html. This portal allows you to manage all your business tax accounts in one place, including payroll, GST/HST, and corporate income tax.

Steps for online registration:

• 1. Go to the CRA’s My Business Account at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html.
  2. Sign in using your CRA login credentials or register for a new account.
  3. Once logged in, navigate to “Register for a Payroll Account.”
  4. Follow the prompts to add a payroll account to your existing BN.

2. Alternative Registration Methods
   If you prefer not to use the online portal, you can register by mail or phone:

• By Mail: Complete Form RC1B, Request for a Payroll Program Account, and mail it to your local tax services office. You can find the form here: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc1b.html.
• By Phone: Call the CRA’s business inquiries line at 1-800-959-5525 to register for a payroll account over the phone.

Step 3: Fill Out Required Information

Once you’ve chosen your registration method, you will need to provide specific business and employee details:

• Business Name: The legal name of your business as registered with the CRA.
• Business Number (BN): Your 9-digit Business Number.
• Business Address: Your business’s physical and mailing address.
• Employee Start Dates: The date when your employees will start earning wages or salaries.
• Expected Payroll: Estimate your payroll size, which helps determine your remittance schedule (monthly, quarterly, etc.).
• Type of Employees: Specify if you’re hiring family members, nannies, or caregivers, as this may impact remittance requirements.

After providing this information, the CRA will create your payroll account and assign you a unique payroll account number.

Step 4: Understanding Deadlines and Confirmation Once Your Payroll Account is Active

After submitting your registration, the CRA will process your request and provide your payroll account number. You’ll need this number to remit deductions and file payroll reports with the CRA.

• Payroll Remittance Deadlines:
  Once your account is active, you’ll need to remit payroll deductions (income tax, CPP, EI) by specific deadlines. Your remittance frequency depends on your payroll size:
  • Monthly Remitters: Remit by the 15th of the month following the deductions.
  • Quarterly Remitters: Remit by the 15th of the month following the end of the quarter.
  • Accelerated Remitters: Large payrolls may require weekly remittances.
    More details on remittance schedules can be found at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-overview.html.
• T4 and T4A Deadlines:
  At year-end, you need to file T4 and T4A slips, summarizing all payroll activity. The deadline for filing T-slips and providing them to employees is the last day of February the following year.
  Find more information on T-slips here: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/t4-information-employers/t4-slip.html.
• Confirmation of Payroll Account:
  After registering, the CRA will send you a confirmation notice with your payroll account number. You’ll also receive details on your remittance schedule and the due date for your first payroll deductions.

By following these steps, you can register for payroll correctly, ensuring compliance with CRA regulations. For more information, visit the CRA’s payroll registration page at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/open-manage-payroll-account/how-register.html.

 

Filing Payroll Remittances and T-Slips: Frequency and Obligations

After registering for payroll, businesses are required to remit payroll deductions and file T-slips with the Canada Revenue Agency (CRA). This is an ongoing responsibility that requires attention to detail, accurate records, and timely submissions to ensure compliance and avoid penalties. Below, we discuss the obligations related to payroll remittances and T-slips in depth.

Payroll Remittance Schedule

Payroll remittances are the amounts you must deduct from your employees’ wages (income tax, CPP, EI) and submit to the CRA. The remittance schedule varies based on the size of your business’s payroll, and understanding when and how often to remit is crucial to avoiding penalties.

1. Monthly Remitters
   Most small businesses and family-owned enterprises fall under the monthly remitter category. If your average monthly payroll deductions are less than $25,000, you will remit on a monthly schedule.

• Due Date: Remittances must be submitted by the 15th of the month following the payroll month. For example, payroll deductions for September must be remitted by October 15.

2. Quarterly Remitters
   Smaller businesses with consistent payroll amounts may qualify for quarterly remittances. To qualify, your monthly average remittances must be less than $3,000.

• Due Date: For quarterly remitters, the due dates are the 15th of the month following the end of the quarter (April 15, July 15, October 15, and January 15).

3. Accelerated Remitters
   Larger businesses with payroll remittances exceeding $25,000 per month fall into the accelerated remitter category. This category is further divided into:

• Threshold 1 (up to $100,000/year): Remittances are due by the third business day after the end of the following periods: 1st to 15th of the month and 16th to the last day of the month.
• Threshold 2 (more than $100,000/year): Remittances are due by the next business day following the payroll payment.

Failing to meet these remittance deadlines can result in significant penalties and interest. The CRA imposes penalties ranging from 3% to 10% of the amount due, depending on how late the remittance is.

Overview of T4, T4A, and T4NR Filings and Deadlines

At the end of the calendar year, employers must file various T-slips that summarize employee earnings and any taxes deducted. The most common T-slips are T4, T4A, and T4NR (for non-resident employees), and each has specific filing requirements.

1. T4 Slip (Statement of Remuneration Paid)

• Purpose: The T4 slip is used to report wages, salaries, bonuses, taxable benefits, and other employment income earned by employees.
• Who Must File: Any employer who has paid employees during the year must file T4 slips for each employee.
• Due Date: T4 slips must be filed with the CRA and provided to employees by the last day of February of the following year. For example, T4 slips for 2023 must be submitted by February 29, 2024.

2. T4A Slip (Statement of Pension, Retirement, Annuity, and Other Income)

• Purpose: T4A slips are used to report payments such as pensions, self-employment income, or commissions, as well as amounts paid to contractors.
• Who Must File: Employers who have made payments to independent contractors or non-employment income payments to individuals must file T4A slips.
• Due Date: Like T4 slips, T4A slips are due by the last day of February.

3. T4NR Slip (Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada)

• Purpose: T4NR slips are required when a business has paid non-resident individuals for services rendered in Canada. These slips are essential to ensure compliance with withholding tax obligations for non-residents.
• Who Must File: Employers who have paid non-resident employees or contractors for work in Canada must file a T4NR slip.
• Due Date: T4NR slips also must be submitted by the last day of February of the following year.

It’s important to note that, in addition to filing these T-slips with the CRA, employers must provide copies to the employees or contractors by the same deadline.

T-Slips: What Each Slip Represents, Who Should File Them, and When They Are Due

• T4 Slip: Represents employment income paid to employees, including salaries, wages, bonuses, and taxable benefits. Employers must file these by the last day of February each year.
• T4A Slip: Represents payments to independent contractors or pension and retirement income. These are filed by employers who pay contractors or provide non-employment income.
• T4NR Slip: Represents payments made to non-resident individuals for services in Canada. Employers must file these for non-resident workers.
  Deadlines:
  T4, T4A, and T4NR slips must be filed with the CRA and distributed to recipients by the last day of February each year. Missing this deadline can result in penalties, with fines ranging from $100 to $7,500 depending on the number of slips and the length of the delay.

Best Practices for Payroll Remittances and T-Slip Filings

1. Accurate and Timely Filings to Avoid CRA Penalties
   Accuracy in payroll remittances and T-slip filings is crucial. The CRA imposes penalties for both late and incorrect filings. Ensuring timely submissions means adhering to the remittance schedule and T-slip filing deadlines. It is also vital to verify that all deductions (income tax, CPP, EI) are calculated correctly and match the amounts reported on your T-slips.

• Penalties for Late Remittances: The CRA charges a penalty of 3% of the amount you owe if you are 1-3 days late, increasing to 10% if the payment is more than 7 days late.
• Penalties for Late T-Slips: Fines range from $100 to $7,500 for missing the T-slip deadline, depending on the number of slips and how late they are filed.

2. Maintaining Proper Documentation
   Maintaining clear and accurate records is essential for both payroll remittances and T-slip filings. Employers should store payroll records, employee contracts, timesheets, and payment summaries to support the amounts filed with the CRA. Proper documentation will also help in case of an audit or any queries from the CRA regarding your filings.

• Source Documents: Employers should keep records of employee wages, bonuses, taxable benefits, and remittances to CRA for a minimum of six years. This includes pay stubs, payroll summaries, contracts, and bank statements.

3. Automating Payroll with QuickBooks Online (QBO)
   One of the most effective ways to ensure timely and accurate payroll filings is by using payroll software such as QuickBooks Online (QBO). QBO allows businesses to automate payroll processes, including tax calculations, remittances, and T-slip filings. By setting up payroll automation, you reduce the risk of human error and ensure that all remittances and filings are completed on time.

• Benefits of QBO: Automatic tax deductions and payroll remittance tracking, plus built-in tools to generate T-slips and file them with the CRA.
• Shajani CPA’s Expertise: Utilizing the expertise of Shajani CPA to set up and manage payroll with QBO ensures that your business remains compliant, and payroll processes run smoothly.

By understanding your payroll remittance schedule, filing T-slips on time, and following best practices for accuracy and documentation, you can avoid CRA penalties and maintain compliance. Accurate payroll and timely submissions build trust with employees and contribute to the overall financial health of your family-owned business.

 

Supporting Documents for Payroll Filings: What to Save

Accurate record-keeping is essential for businesses to ensure compliance with the Canada Revenue Agency (CRA) and avoid penalties related to payroll filings. Supporting documents for payroll filings are a critical part of this process. These records not only help you complete payroll remittances and T-slip filings accurately, but they also provide a clear audit trail in case the CRA requests verification of your payroll records. Below, we discuss in depth what source documents are required and what information must be included to ensure compliance.

List of Source Documents Required to Support Payroll Filings

For accurate payroll filings, a variety of documents must be maintained, covering all aspects of employee compensation. These source documents serve as evidence of the amounts paid to employees and the deductions made for income tax, CPP, and EI. It’s crucial to keep these records organized and up-to-date to ensure smooth filings with the CRA.

1. Employee Contracts
   Employee contracts outline the terms of employment, including wage agreements, benefits, and other compensation arrangements. Having an employee contract on file is essential as it forms the basis for determining how much an employee is paid, what benefits they receive, and what deductions are to be made. Contracts should clearly specify the employee’s pay structure (hourly or salary), their employment start date, and any agreed-upon benefits or bonuses.
2. Time-sheets
   For employees paid on an hourly basis, time-sheets or attendance logs are crucial for tracking the hours worked. This documentation helps ensure that the correct amount of wages is paid and that the corresponding deductions (CPP, EI, and income tax) are made accurately. Time-sheets should include the dates worked, the hours logged per day, and any overtime hours, if applicable.
3. Pay Stubs
   Pay stubs are perhaps the most critical piece of documentation when it comes to payroll filings. They provide a breakdown of wages paid, tax deductions made, and benefits disbursed for each pay period. Pay stubs should be issued for each payroll cycle and retained as they show the actual payments made to employees, including all withholdings and contributions.
4. Proof of Salary and Benefit Disbursements
   For salaried employees, proof of salary disbursements, such as bank records or direct deposit receipts, should be retained. This documentation verifies the payment of wages as per the employment contract and should correspond to the amounts shown on pay stubs. Documentation of benefit disbursements, such as health or retirement benefits, is also required to support any non-cash compensation provided to employees.
5. Receipts or Documentation for Bonuses, Commissions, and Other Employee Earnings
   Bonuses, commissions, and other forms of employee earnings outside of regular salary or wages must also be documented thoroughly. This includes year-end bonuses, sales commissions, and performance-based incentives. Receipts or specific documentation related to these earnings should be kept, and these amounts must be reflected in the payroll filings to the CRA, including on T4 or T4A slips.
6. Proof of Tax Remittances to CRA
   In addition to employee compensation records, it’s important to maintain proof of payroll tax remittances to the CRA. This includes records of income tax, CPP, and EI contributions remitted for each payroll cycle. These records provide evidence that the appropriate amounts were deducted from employee wages and submitted to the CRA on time.

What Information Must Be in the Source Documents

The CRA requires detailed information in your payroll records to support the amounts you report and remit. The accuracy of this information is critical, as errors in reporting can lead to penalties or audits. Below is the key information that should be included in your source documents:

1. Employee Name
   Each source document must clearly identify the employee by name. This ensures that all records can be traced back to the correct individual.
2. Social Insurance Number (SIN)
   Every employee must provide a valid Social Insurance Number (SIN) as part of their payroll documentation. The SIN must be included in all payroll-related filings to the CRA, as it is used to track CPP, EI, and income tax contributions for each employee.
3. Dates Worked
   For hourly employees, time-sheets and pay stubs must include the specific dates worked. This helps calculate accurate payroll amounts and verifies compliance with employment contracts. For salaried employees, the pay period covered by each pay stub should be indicated.
4. Amounts Paid
   The total amount paid to each employee must be recorded in your payroll documents. This includes regular wages or salary, overtime pay, bonuses, commissions, and any other forms of compensation.

• For Hourly Employees: The hourly wage rate and the number of hours worked must be clearly documented.
• For Salaried Employees: The total salary disbursed for each pay period should be reflected.

5. Tax Deductions (CPP, EI, Federal and Provincial Taxes)
   Each pay stub or payroll document must show the amounts deducted from the employee’s gross earnings for taxes and contributions. These include:

• Income Tax: Federal and provincial taxes withheld based on the employee’s earnings and tax bracket.
• CPP Contributions: Canada Pension Plan contributions deducted from the employee’s pay.
• EI Premiums: Employment Insurance premiums deducted from the employee’s pay.

Employers are required to remit these amounts to the CRA on behalf of their employees. Therefore, ensuring that the amounts are accurate and properly documented is critical.

6. Other Benefits
   If employees receive additional benefits such as health insurance, pension contributions, or stock options, these must also be documented. These benefits are often taxable and must be included in the employee’s total compensation.

• Non-Cash Benefits: Any non-cash benefits such as housing, company cars, or stock options should also be documented, along with their taxable value.

Summary of Key Documentation for Payroll Filings

Employee Contracts: Establishes pay structure and benefits.
Time-sheets: Tracks hours worked for hourly employees.
Pay Stubs: Documents wages paid, taxes deducted, and benefits disbursed.
Proof of Salary and Benefit Disbursements: Verifies payments made to employees.
Receipts for Bonuses, Commissions, and Other Earnings: Supports any additional compensation outside of regular wages.
Proof of Tax Remittances: Verifies that the correct deductions were remitted to the CRA.

Ensuring that these documents are complete and accurate is not just a matter of regulatory compliance—it also protects your business from the risk of audits, penalties, and financial mismanagement. By maintaining proper documentation, you can efficiently manage payroll filings and provide the necessary support if your records are ever reviewed by the CRA.

 

Bookkeeping and Payroll: Best Practices for Documenting Payroll Using QBO with Shajani CPA

Accurate and efficient payroll management is essential for businesses, especially family-owned enterprises, to ensure compliance with the Canada Revenue Agency (CRA) and avoid costly errors or penalties. Using a robust accounting software like QuickBooks Online (QBO) simplifies payroll management and automates many time-consuming tasks. Below, we explore the best practices for documenting payroll using QBO, alongside the benefits of working with Shajani CPA to set up and manage your payroll processes.

QBO Automation

Benefits of Using QuickBooks Online (QBO) to Track Payroll Efficiently
QuickBooks Online is a leading cloud-based accounting solution that offers powerful features to manage payroll seamlessly. By using QBO to handle your payroll, you can streamline many aspects of payroll management, from calculating employee earnings and deductions to remitting taxes and generating payroll reports.

One of the primary benefits of QBO is its automation of payroll processes. Through QBO’s automated features, you can:

• Automate Payroll Calculations: QBO automatically calculates employee pay based on their hourly or salaried rate, including deductions for taxes, Canada Pension Plan (CPP), and Employment Insurance (EI).
• Simplify Compliance: QBO keeps up-to-date with CRA payroll regulations and ensures that your deductions and remittances are always accurate.
• Generate Payroll Reports: You can easily generate reports summarizing payroll expenses, remittances, and year-to-date earnings. These reports are crucial for end-of-year filings, such as T4 and T4A slips.
• Real-Time Payroll Management: With QBO’s cloud-based system, you can access your payroll data anytime, anywhere, and make real-time updates as needed.

By automating these tasks, QBO reduces manual entry and human error, freeing up valuable time for business owners to focus on growth and strategy.

Integrating Bank Feeds and Automatic Tax Calculations to Reduce Errors
QBO’s ability to integrate with your business bank accounts offers a tremendous advantage in managing payroll. By syncing your bank feeds with QBO, all payments made to employees are automatically recorded in the system. This feature ensures that payroll data is always accurate and up-to-date without the need for manual entries. The automation of bank feeds also provides a real-time snapshot of cash flow, allowing you to ensure that funds are available to meet payroll obligations.

Another key feature of QBO is its automatic tax calculation tool. QBO automatically calculates payroll deductions such as federal and provincial income taxes, CPP, and EI contributions. The system also calculates the employer’s share of these contributions, ensuring that both the employee and employer obligations are met accurately. Automatic tax calculations reduce the risk of errors in tax remittances, a critical factor for compliance with CRA regulations.

Incorporating these features helps businesses avoid costly mistakes, such as underpayment or overpayment of employee wages or tax remittances. The automated calculations and real-time updates provided by QBO streamline the payroll process, enhancing both accuracy and efficiency.

Shajani CPA Services

How Shajani CPA Can Guide Family-Owned Businesses in Setting Up and Managing Payroll in QBO
While QBO provides an intuitive platform for managing payroll, setting up the system correctly and aligning it with your business’s specific needs requires professional expertise. This is where Shajani CPA can offer invaluable assistance. Shajani CPA specializes in helping family-owned businesses like yours navigate the complexities of payroll by providing tailored solutions within QBO.

Setting Up Payroll in QBO:
Shajani CPA can guide you through the entire setup process, ensuring that your payroll system in QBO is customized to your business’s structure. This includes:

• Setting up employee profiles with correct pay rates, tax details, and deductions.
• Integrating QBO with your business’s bank accounts for automated bank feeds.
• Ensuring compliance with CRA requirements by correctly configuring payroll taxes, remittance schedules, and employment insurance.

By working with Shajani CPA, your payroll system will be set up to maximize efficiency while ensuring compliance with federal and provincial tax laws.

Managing Payroll in QBO:
Once your payroll is set up in QBO, Shajani CPA can continue to support you by managing ongoing payroll functions. This includes:

• Monitoring Payroll Compliance: Shajani CPA’s team of experts will ensure that your business adheres to all CRA regulations, including proper withholding of taxes and remitting payroll deductions on time.
• Year-End Filings: When it comes to year-end T4, T4A, or T4NR filings, Shajani CPA can assist in generating the required reports and slips, ensuring that all employee earnings and deductions are correctly reported to the CRA.
• Handling Complex Payroll Issues: For businesses with more complex payroll structures, such as those hiring non-resident employees or providing taxable benefits, Shajani CPA’s experience can ensure these elements are accurately recorded and reported.

With Shajani CPA overseeing your payroll, you can focus on growing your family-owned business, knowing that your payroll is in good hands.

Emphasize Tax Expertise in Payroll-Related Compliance
Payroll management involves more than just issuing paychecks—it requires staying up-to-date with changing tax laws, ensuring accurate reporting, and meeting strict deadlines for tax remittances. This is where the tax expertise of Shajani CPA becomes particularly valuable.

CRA Compliance:
Shajani CPA ensures that all payroll filings, tax remittances, and reports generated through QBO comply with CRA standards. This includes making sure all required deductions are made for income taxes, CPP, and EI, as well as ensuring that the employer’s portion of these deductions is properly calculated and remitted. By working with Shajani CPA, you can rest assured that your business is meeting its legal obligations for payroll, avoiding fines, and staying compliant.

Handling Tax Complexities:
Family-owned businesses often have more intricate tax situations, such as employing family members, paying bonuses, or providing non-cash benefits. These complexities can introduce challenges when managing payroll. Shajani CPA’s deep understanding of tax laws ensures that these issues are handled efficiently. Whether it’s calculating taxable benefits or navigating payroll for non-resident employees, Shajani CPA provides the expertise needed to avoid costly tax mistakes.

Ongoing Support:
As tax laws change, Shajani CPA stays on top of these developments and ensures that your payroll system remains compliant with the latest regulations. Shajani CPA also provides ongoing advice and support, helping you make informed decisions that minimize your tax liability while ensuring that employees are compensated fairly and accurately.

In summary, using QuickBooks Online (QBO) in conjunction with the payroll expertise of Shajani CPA offers an effective solution for family-owned businesses to manage their payroll efficiently and in compliance with CRA regulations. QBO’s automation of payroll processes, tax calculations, and bank integration simplifies payroll management, while Shajani CPA’s personalized setup and ongoing support ensure that your payroll system is tailored to meet your unique business needs. By leveraging the best practices in payroll documentation and compliance, you can reduce the risk of errors and penalties while focusing on growing your business.

 

What to Do When an Employee Leaves: Handling the Record of Employment (ROE)

When an employee leaves your business, either due to resignation, termination, layoff, or retirement, the employer must issue a Record of Employment (ROE). This form is essential because it allows employees to apply for Employment Insurance (EI) benefits. Filing an ROE accurately and within the required deadlines is crucial for both the employer and the employee. For the employee, a correctly filed ROE ensures timely access to EI benefits, while for the employer, it ensures compliance with Service Canada’s regulations and avoids penalties. Here’s a detailed guide on how to handle the ROE filing process.

Filing an ROE

Step-by-Step Instructions for Generating and Filing an ROE Online or Through Service Canada
The fastest and most efficient way to file an ROE is through ROE Web, an online service provided by Service Canada. The online filing method streamlines the process, minimizes errors, and ensures immediate submission to Service Canada. Filing electronically is highly recommended, though employers can also submit paper ROEs if necessary.

1. Register for ROE Web
   To file an ROE online, you must first register for the ROE Web service. Start by visiting https://www.canada.ca/en/employment-social-development/services/records-employment.html.
   You will need to create a GCKey or use a Sign-In Partner (such as a financial institution) to access the system. Once logged in, you will link your business account using your Business Number (BN). If your business already uses CRA’s My Business Account, integrating these systems will streamline your access to ROE Web.
2. Create a New ROE
   After logging in, select “Create New ROE.” The system will prompt you to input key employee details, including their Social Insurance Number (SIN), employment start and end dates, and the reason for the termination or separation. The system will automatically guide you through the required fields to ensure all essential information is captured.
3. Complete the ROE Form
   As you fill out the ROE form, you’ll need to include details such as the employee’s last day of work, total earnings for their final pay period, and the number of hours worked. You’ll also need to accurately select the reason for separation, whether it is a resignation, layoff, illness, or retirement. It’s crucial to choose the correct reason, as this affects the employee’s eligibility for EI. For example, employees dismissed for misconduct may not be eligible for benefits, whereas those laid off due to lack of work would generally qualify.
4. Submit the ROE
   Once you’ve reviewed the form for accuracy, submit it through ROE Web. The submission is instantly sent to Service Canada, and the employee can access their ROE through their My Service Canada Account. It is recommended that employers retain a copy of the submitted ROE for their records.

Alternative Filing Methods (Paper Filing)
Employers who prefer to use paper forms can order blank ROE forms from Service Canada, but paper filing is slower and more prone to delays. After completing the form, employers must provide one copy to the employee and mail a copy to Service Canada. More detailed instructions for manual ROE filing can be found at https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/roe-guide.html. However, due to the inefficiency of paper filing, it’s highly recommended to use the ROE Web service.

Explanation of Deadlines and Why Timely Filing Matters
Filing an ROE promptly is not only a legal obligation but also essential for ensuring that the departing employee can apply for Employment Insurance (EI) benefits without unnecessary delays. Depending on how frequently you pay your employees, the deadline for submitting an ROE varies:

• For Employees Paid Weekly, Bi-Weekly, or Semi-Monthly: The ROE must be filed within five calendar days of the last day the employee worked, or within five days after the date the employer becomes aware that the employee will no longer be working.
• For Employees Paid Monthly or Irregularly: The ROE must still be filed within five calendar days following the end of the last pay period or the date of termination.

Timely submission is crucial because employees need the ROE to apply for EI benefits. Delays in filing the ROE can prevent employees from receiving EI payments on time, leading to potential financial difficulties. For employers, failing to meet the ROE deadlines can result in penalties and compliance issues, as well as reputational damage if the employee files a complaint with Service Canada.

Information Required for the ROE

When completing an ROE, employers must provide detailed information to ensure the document accurately reflects the employee’s work history and compensation. This data is critical for determining the employee’s eligibility and benefit amounts for EI. Below are the key details that must be included:

1. Last Day Worked
   This field reflects the final day the employee physically worked, not the date of their final paycheck or any vacation or severance pay. The accuracy of this date is important because it determines the employee’s EI eligibility period.
2. Total Earnings
   Total earnings must include all wages paid to the employee during the relevant pay periods, as well as any additional compensation such as overtime, bonuses, vacation pay, or severance. Make sure to accurately report all earnings as they impact the calculation of EI benefits.
3. Hours Worked
   The total number of hours worked by the employee in their final pay period must be recorded, particularly for hourly or part-time workers. This data helps calculate the employee’s EI benefits. Even salaried employees may have accrued overtime or other additional hours that should be reflected.
4. Reason for Termination or Separation
   Accurately identifying the reason for separation is essential. The reason selected (e.g., resignation, layoff, dismissal, or illness) will influence the employee’s eligibility for EI benefits. For example, employees dismissed for misconduct or who voluntarily resign without just cause may not qualify for EI. Be specific and truthful in documenting the reason for the employee’s departure.

Consequences of Failing to File Correctly

The failure to file an ROE on time, or providing incorrect information, can have serious consequences for both the employee and the employer.

1. Delays in Employment Insurance (EI) Claims
   Employees cannot apply for EI benefits without a properly filed ROE. If the ROE is delayed, the employee’s EI application is also delayed, potentially leaving them without financial support during unemployment. This can cause significant hardship for the employee, particularly if they rely on EI as a temporary income source.
2. Penalties for Employers
   Employers who fail to file an ROE on time or submit inaccurate information can face penalties from Service Canada. These fines can be substantial, particularly for repeat offenses, and the employer may be required to issue corrected ROEs, which could delay the employee’s access to EI benefits further. In extreme cases, non-compliance with ROE requirements may result in audits or legal action.
3. Compliance Issues
   Failure to comply with ROE filing requirements can signal broader compliance issues within your payroll practices. If Service Canada or the CRA identifies repeated issues with your ROE filings, your business may face increased scrutiny, which could lead to audits or further investigations into your payroll and tax processes. Maintaining proper ROE filings ensures that your business remains compliant and reduces the risk of being flagged for audits.

In summary, handling the ROE process accurately and efficiently is crucial to supporting both the departing employee and your business. Timely and correct ROE filings help the employee transition smoothly to EI benefits and protect your business from penalties or compliance issues. By following the proper steps and ensuring all required information is reported correctly, employers can fulfill their legal obligations while maintaining positive relations with both employees and regulatory authorities.

 

Conclusion: Ensuring Payroll Compliance and Efficient Operations

Managing payroll accurately and efficiently is a vital component of any business, especially for family-owned enterprises, where maintaining compliance with the Canada Revenue Agency (CRA) is essential to avoid penalties and ensure smooth operations. To summarize, the critical steps to successfully register and manage payroll include:

• Registering for a payroll account with the CRA, ensuring you have your Business Number (BN) in place, and choosing the correct remittance schedule based on your business’s payroll size.
• Filing payroll remittances and T-slips on time, according to your remittance schedule, and ensuring accurate deductions for income tax, CPP, and EI. This includes submitting T4, T4A, and T4NR slips for employees and contractors.
• Maintaining accurate payroll records with detailed documentation of wages, hours worked, benefits, and tax deductions, to support payroll filings and demonstrate compliance during potential audits.
• Filing Records of Employment (ROE) promptly when an employee leaves, ensuring all necessary information is recorded accurately to allow the employee to claim Employment Insurance (EI) benefits if eligible.

By following these steps, businesses can ensure compliance with CRA regulations and avoid costly errors or penalties. However, managing payroll can be complex, particularly for businesses dealing with unique challenges like family members on payroll, non-resident employees, or complex employee benefits.

This is where professional tax services like Shajani CPA become invaluable. Shajani CPA offers expert guidance on setting up and managing payroll using advanced software like QuickBooks Online (QBO), which automates payroll calculations, integrates bank feeds, and ensures timely and accurate filings with the CRA. Shajani CPA not only helps streamline your payroll operations but also ensures that your business remains compliant with all applicable tax laws. Their deep expertise in tax and payroll compliance enables businesses to focus on growth, knowing that all payroll responsibilities are being handled with precision.

If you’re looking for expert assistance in managing your payroll, tax filings, and compliance, Shajani CPA is here to guide you. Tell us your ambitions, and we will guide you there. Contact us today to learn more about how we can help simplify your payroll processes and ensure your business remains compliant and efficient.

References

• CRA Payroll Registration: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/open-manage-payroll-account/how-register.html
• CRA Payroll Remittances: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-overview.html
• CRA T4 Slip Information: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/t4-information-employers/t4-slip.html
• Service Canada ROE Guide: https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/roe-guide.htmlBottom of Form

 

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.

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