Understanding Payroll and Tax Remittance

payroll tax remittance

Quite often new business owners become overwhelmed with the administrative sector of the business in regards to their new obligations as a Company to the Canadian Government.  Perhaps going into the business they assumed that yes there would be tax filings to be done at the end of the year, but this would only present a week or two of dealing with the Government and that would be it.

It can go way above this depending on the type of business as it may include GST/HST obligations as well as payroll and tax remittance.

Even if there is only one employee, or some part time employees knowing what your tax obligations are regarding these workers is paramount to keeping within the law and meeting your business obligations.

Your first responsibility is determining if you are seen as an employer in the eyes of the government. The government has a set criteria that they follow to determine if there is an employer-employee relationship.

Assuming that this is the case you will need to apply for a payroll business account. You may be able to add this to your existing business number account if you already have one.

You should always be aware of what your business obligations are for this reason you should at least take the time to learn the basics about payroll and tax remittance.   It is a complicated area of the tax responsibilities and you really may want to rely on the expertise of an experienced tax accountant to direct you in fulfilling these obligations properly.   You really don’t want to get into a hassle over this area of tax as it can be perplexing and time consuming, and involves your employees.

Your basic responsibility is going to be ensuring that your may the proper deductions from the income earned by your employees, according to the CRA mandate.   This will include the remitting these deductions in the proper manner to the government as well as some reporting procedures.

You will have to gather specific information about each and every employee like their social insurance number for example.   Then there are several forms that must be completed.   The most common forms of deductions are items like CPP contributions, EI premiums as well as income tax.   There may be others as well and this is why it is important that you know what your obligations are.

Payroll can be time consuming and you may want to hire a professional to assist you with this as it is an ongoing responsibility that has to be attended to on each employee pay date, and is not just a once in the year obligation.

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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