2022 Useful Payroll Setup Checklist in Canada: An Ultimate Guide

by | Jun 3, 2022

In Canada, opening a new payroll account is a simple process. Some missteps can be difficult. As a result, to build a successful payroll system, you must be cautious from the beginning.
The payroll system can be confusing, but never fear! If you’re looking for a payroll service in Mississauga, look no further than Yogi & Associates.

1. Setting Up Payroll Setup Checklist for Small Businesses in Canada:

As a small business owner, you must figure out how to set up a helpful payroll setup checklist system. Payroll is a procedure controlled by regulatory duties that affect your business. But this can result in penalties if mishandled. Thus, the payroll setup checklist must include the employee’s working status.

2. How to Plan your Payroll System?

Planning your payroll system is essential in ensuring your company’s financial health. Before you begin planning your payroll system, you must first determine the following:
  • Are you dealing with payroll inside or outsourced to a third party?
  • Employee salary structure, such as hourly, weekly, biweekly, or monthly.
  • The types of benefits provided to employees. Also, if these benefits are dealt with inside or outsourced to a third party.
  • The incentives, medical benefits, health insurance, and rewards given to the employees.
  • What amount will you pay for overtime?
  • How will you calculate their taxes, and how much will you pay them for their services?

3. Five Rules and Regulations to Plan a Payroll System:

Here is a list of all the rules and policies to develop in a payroll system:
  1. You can pay in three ways, for example, on a weekly, biweekly, or monthly basis. So, you should notify your employees of their pay period at least one week in advance.
  2. When you hire someone, you should give them their first paycheck within three days of hiring them.
  3. If you have fired an employee, you must pay their payslip within one week of their termination.
  4. You must ask for written permission from an employee if they are changing their plan. For example, working hours or days or taking holiday leave.
  5. It would be best if you compensated employees who work overtime. The pay should depend on the number of hours worked and if they are hourly or salaried employees.

4. The Payroll Setup Checklist:

We have divided the payroll setup checklist into two categories:

  1. The payroll setup checklist for business.
  2. The payroll setup checklist for employees.

1. The Payroll Setup Checklist for Business:

The payroll checklist for business includes:

  • Payment method for employees (Weekly, Biweekly, Monthly)
  • Types of rewards, benefits (health and dental insurance), vacations, or sick leaves.
  • Tax information,
  • Remittance schedule.
  • Business number and CRA Payroll Account Number.
  • Address of the company.
  • Employees’ pay structure, whether it’s weekly, biweekly or monthly.
  • Contract duration of each employee.
  • Totals for the year to date for all employees.

2. The Payroll Setup Checklist for Employees:

The payroll setup checklist for employees includes:

  • Employee’s full name.
  • Date of birth.
  • SIN.
  • Home Address.
  • Email Address.
  • Employee’s salaries, additions, deductions, and employee’s contributions.
  • Bank deposit information.
  • Hiring and retirement dates.
  • Forms TD1 (federal and provincial) that have been completed and approved.

Following the above rules and the checklist will assist you in setting up your payroll system and hiring new employees. Now, after setting the payroll checklist, you can set the payroll system based on this checklist. 

5. Five Steps to Set Up Payroll System in Your Company:

Running a payroll process in your company can be stressful. So, the consequences of getting it wrong can be costly. Hence, the following are the essential aspects you need to set up your payroll system:
  1. Business Address.
  2. Business Number and CRA Payroll Account.
  3. Remittance Schedule.
  4. Bank Account.
  5. Setting up your employees.

1. Business Address:

You need to make sure you add your business address. So, you must include the street number, state, name, region, postal code, and telephone number.

2. Business Number & CRA Payroll Account:

You will need a business number for setting up a payroll system in your company. Thus, you can register your business number online by email, fax, or phone. You can also click Register BN/Payroll Account Number to learn more about registration for a business number.
Your business number is also a part of the CRA payroll account number. It contains the following information:
  • A 9-digit BN represents a company.
  • The CRA program account is a two-letter program identifier code (RP for payroll).
  • A four-digit reference number that represents a specific CRA account.

3. Remittance Schedule:

The next step is the remittance schedule. First, you must figure out which category of remittance schedule you want. Furthermore, to learn about the types of remittances, click Remittance schedule. The two-year average monthly withholding amount determines your payment method.

4. Bank Account:

The next step is to give correct information about your bank account. But, if you provide accurate bank account details, it will be easier to pay employees.

5. Setting up your Employees:

After all these steps, you also need to give accurate details of your employees. It includes:

  • Employees’ first/last name.
  • Birthdate.
  • Home Address.
  • SIN.
  • Email ID.
  • Mention the province if an employee works in a different state.
  • Hiring date.
  • Pay rate.
  • The payment method given to the employee.
  • The tax amount taken from the employee’s salary.

Wrapping it up!

Setting up a payroll checklist can be difficult due to the numerous challenging situations. As a result, for this process to work, all necessary information must be provided. However, to avoid financial penalties, ensure that it is correct. So, Yogi & Associates are here to help! You can create a payroll setup checklist using our payroll services.

Get in touch with Yogi & Associates!