Tax Punjabi - Payroll

Outsourcing Payroll: What to Look For in a Provider

Category: Payroll Reading time: 8 min read Published: 1/3/2026

Thinking of outsourcing payroll? Here's what to consider: features, pricing, compliance guarantees, and questions to ask before signing.

🎯 Key Takeaways
  • Look for guaranteed on-time remittances
  • Ensure T4/ROE preparation is included
  • Check if they handle Workers' Comp reporting
  • Understand pricing: per employee vs flat fee
  • Ask about penalty coverage if they make errors

🤔 When to Outsource Payroll

✅
Signs It's Time
  • You've received CRA penalties
  • Payroll takes hours of your time
  • You're unsure if calculations are correct
  • You're hiring more employees
  • You want to focus on growing the business

📋 Essential Features Checklist

  • Accurate calculation of all deductions (CPP, EI, tax)
  • Automatic remittance to CRA
  • T4 preparation and filing
  • ROE generation when employees leave
  • Direct deposit processing
  • Online access for you and employees
  • Year-end reconciliation
  • Support for provincial differences

💰 Understanding Pricing

📊
Common Pricing Models
  • Per employee per month: $5-$15 per employee
  • Flat monthly fee: $50-$200 for small businesses
  • Per pay run: $20-$50 per processing
  • Percentage of payroll: Rare, usually expensive
Watch for Hidden Costs
  • Setup fees
  • Year-end processing fees
  • T4/ROE filing fees
  • Direct deposit fees
  • Support call fees

❓ Questions to Ask

1️⃣
"What happens if you make an error?"

Look for providers who cover CRA penalties if THEY cause the error. This is a sign of confidence in their accuracy.

2️⃣
"Is year-end included?"

Some providers charge extra for T4 preparation, filing, and year-end reconciliation. Get this in writing.

3️⃣
"How do you handle ROEs?"

Employees leaving need ROEs fast for EI claims. Ensure quick turnaround.

4️⃣
"Do you support my province?"

Provincial tax rates, vacation rules, and stat holidays differ. Ensure they handle yours correctly.

🏆 What Good Looks Like

✅
Ideal Payroll Provider
  • Transparent all-inclusive pricing
  • CRA remittances guaranteed on-time
  • Penalty protection if they err
  • Easy online access
  • Responsive customer support
  • Experience with your industry
  • Integrated with your accounting

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This article is for educational purposes only. Consult a professional for your specific situation.