Payroll Setup for Canadian Employers Hiring Their First Staff
Hiring an employee means registering with the CRA, withholding the right deductions and remitting them on time from the first pay. Bestax sets up your payroll account, software and records so your first pay run is correct and every one after it follows the same rules.
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Who Needs Payroll Set Up Properly
Payroll setup matters most at the start, when a business pays its first employee, and again whenever the way people are paid changes. Mistakes made at setup repeat on every pay run until someone finds them.
- New businesses hiring their first employee and paying wages for the first time.
- Incorporated owners who want to start paying themselves a salary through payroll.
- Employers moving from manual payroll or spreadsheets to payroll software.
- Businesses hiring in a new province, with different employment standards and registrations.
- Owners unsure whether the people they pay are employees or self-employed contractors.
- Employers whose payroll was set up incorrectly and needs to be rebuilt from the right base.
Your payroll account must be open before your first remittance is due. Deductions are owed from the first pay, whether or not the account exists yet.
Already running payroll? See our ongoing Payroll Services, or our T4 and year-end reporting.
What Our Payroll Setup Service Covers
We set up each part of payroll in order, so registrations, deductions and software all agree before the first employee is paid.
- Opening the CRA payroll program account (RP) on your business number, or confirming the one you have.
- A review of each worker’s status, so employees are on payroll and contractors are paid and reported correctly.
- Federal and provincial TD1 forms collected from each employee, and their claim amounts set up.
- Income tax, CPP, the second additional CPP contribution and EI configured, with your remitter type and due dates.
- Payroll software selected or configured: pay frequency, vacation pay, statutory holidays and direct deposit.
- Guidance on workers’ compensation registration, such as WSIB in Ontario, and a checked first pay run.
The Rules Payroll Has to Follow
Employers withhold income tax, Canada Pension Plan contributions and Employment Insurance premiums from each pay, add their own CPP and EI share, and remit the total to the CRA. Earnings between the first CPP ceiling and a second, higher ceiling also attract the second additional CPP contribution, introduced in 2024.
Provincial law sets the employment standards: minimum vacation pay, public holidays, overtime and pay statements. Most provinces also require employers in covered industries to register with their workers’ compensation board. Quebec employers deal with Revenu Québec as well as the CRA.
A payroll program account must be opened on your business number before the first remittance is due.
New employers are generally regular remitters, with deductions due by the 15th of the month after they are withheld.
Income tax, CPP, CPP2 and EI are each calculated per pay, using the CRA’s current rates and each employee’s TD1 claims.
Treating an employee as a contractor can leave the employer liable for the CPP and EI that should have been deducted, with penalties and interest.
Remitter type can change as payroll grows. The CRA tells employers when their remitting frequency changes, and the setup has to follow it.
Payroll Setup Steps and When They Are Due
Some setup steps come before the first pay; others start the calendar that payroll follows from then on.
| Setup step | What it involves | When it is needed | Who it is with |
|---|---|---|---|
| Payroll program account | An RP account added to your business number | Before your first remittance is due | The CRA |
| TD1 forms | Federal and provincial personal tax credit claims | When each employee starts, and when their situation changes | The employee, kept on file |
| Workers’ compensation | Registration with the provincial board, such as WSIB in Ontario | Soon after hiring, where your industry is covered | The provincial board |
| First remittance | Deductions withheld plus the employer’s CPP and EI share | By the 15th of the following month, for regular remitters | The CRA |
| Year-end slips | T4 slips and summary for everyone paid in the year | Last day of February of the next year | The CRA, with copies to employees |
Quebec employers also register with Revenu Québec, which collects provincial income tax and the Quebec Pension Plan in place of CPP.
What We Need to Set Up Your Payroll
Payroll setup starts with the business and then the people, so we gather the registrations first and each employee’s details second.
If you have already paid someone, tell us. We include those pays in the setup so the year’s records and remittances are complete.
- Your business number and legal business name, and your province of employment.
- Each employee’s name, address, date of birth, social insurance number and start date.
- Completed federal and provincial TD1 forms from each employee.
- Pay rates, hours or salary, pay frequency and any benefits or allowances.
- Banking details for direct deposit, and the payroll software you use or prefer.
- Any pays already made, and agreements with people you treat as contractors.
Our Payroll Setup Process
Plan the payroll
We confirm who you are hiring, where they work, how they will be paid and how often.
Register
We open or confirm your CRA payroll account and point you to the provincial registrations that apply.
Classify and onboard
We confirm each worker’s status and collect TD1 forms and employee details.
Configure the software
We set up deductions, vacation pay, holidays, pay frequency and remittance dates in your payroll system.
Run the first pay
We check the first pay run line by line, along with the pay statements and the remittance it creates.
Hand over or run it
You run payroll with a documented setup, or we continue it for you as an ongoing service.
Why Employers Choose Bestax for Payroll Setup
Right from the first pay
Deductions, remittances and records are correct from the start, not fixed after the first year-end.
Status checked early
We look at how each worker is engaged before payroll begins, when the answer is easiest to act on.
Federal and provincial
We set up the CRA side and the provincial rules your payroll has to follow, together.
Software that fits
We configure the payroll system you already use, or help you choose one suited to your size.
Support after setup
The same team can run your payroll and prepare your year-end slips once setup is done.
Related Bestax Services
Payroll Services to run each pay, remittance and year-end once setup is complete.
Company Registration to incorporate and get your business number before you hire.
Accounting System Setup so payroll entries post cleanly into your accounting software.
Bookkeeping Services to keep payroll, remittances and the rest of your books in step.
What Our Clients Say
We have a small construction company with about 10 employees. Bestax set up our payroll system, handled deductions, and synced everything with CRA. The process was smooth and done within a week.
Google review 1 of 4: Julie Banks
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Frequently Asked Questions
You need a payroll program account on your business number before your first remittance is due. In practice, it is best opened before your first payday, so deductions can be remitted on time.
Generally income tax, CPP contributions, including the second additional CPP contribution on higher earnings, and EI premiums. The employer also pays its own share of CPP and EI. Our guide to calculating payroll taxes in Canada walks through each one.
Most new employers are regular remitters, due by the 15th of the month after the deductions were withheld. The CRA can change your remitting frequency as your payroll grows, and it tells you when it does.
It depends on the working relationship, such as who controls the work, who provides the tools and who bears the financial risk, not on what the agreement calls it. The CRA can rule on a worker’s status if there is doubt.
It depends on your number of employees, provinces and accounting system. We can configure the software you already use or recommend one. See our comparison of the best payroll software in Canada.
In Ontario, most employers in covered industries must register with WSIB once they hire workers, and other provinces have their own workers’ compensation boards. We help you confirm whether your business is covered.