Tax rules, thresholds and administrative procedures can change. Confirm current official requirements and obtain advice for material transactions or unusual facts.
Confirm employee status first
Do not put a worker on invoices merely because both parties prefer contractor treatment. Control, tools, chance of profit, risk of loss, integration and the full relationship matter. A wrong classification can create retroactive CPP, EI, tax, penalties and employment-law exposure.
Open or verify the payroll account
The employer needs the correct CRA payroll program account before remittances and year-end reporting. Record the legal employer name, business number and remitter information. Quebec employers also have provincial payroll obligations.
Collect employee setup information
Obtain legal name, address, SIN, start date, province of employment, pay rate, pay frequency and federal/provincial TD1 forms. Keep banking information outside ordinary email and public website forms.
Calculate the first pay
Define the pay period, hours, salary, overtime, vacation pay, taxable benefits and deductions. Calculate income tax, CPP/QPP and EI using current official tools or tested payroll software. Review employer CPP/QPP and EI contributions separately.
Pay statement and approval
The statement should show the period, gross earnings, each deduction, net pay and year-to-date totals. Have a documented approval before payment. Lock the finalized record and process later corrections as adjustments rather than overwriting history.
Remittances and year-end
Record the remittance due date and reconcile each payment to the payroll register. Maintain T4-ready year-to-date fields from the first pay. Year-end reporting is much easier when taxable benefits and remittances are reconciled monthly.
This article provides general Canadian tax information and is not a substitute for tax, legal, financial or investment advice based on complete circumstances.