Payroll 101: Hiring Your First Employee
ਪੇਰੋਲ 101: ਆਪਣੇ ਪਹਿਲੇ ਕਰਮਚਾਰੀ ਨੂੰ ਨਿਯੁਕਤ ਕਰਨਾ
Step-by-step guide to setting up payroll, opening a CRA account, and managing deductions for your first hire.
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Key Takeaways
- Employers must deduct CPP, EI, and income tax from employee pay
- Remittances are due by the 15th of the following month
- T4 slips must be issued by end of February each year
- Proper classification of employees vs contractors is critical
What is Payroll?
Payroll involves calculating employee wages, deducting required contributions (CPP, EI, income tax), and remitting these amounts to CRA on behalf of your employees.
Required Deductions
CPP (Canada Pension Plan)
Both employer and employee contribute. Rate is 5.95% each in 2025.
EI (Employment Insurance)
Employee pays 1.64%, employer pays 1.4x that amount (2.30%).
Income Tax
Based on TD1 forms and CRA payroll tables.
Important Deadlines
- Monthly remittances: 15th of following month
- T4 slips to employees: Last day of February
- T4 Summary to CRA: Last day of February
Penalties for Late Remittances
CRA charges 3-10% penalties on late payroll remittances, plus interest. Multiple failures can result in 20% penalties.
Need Payroll Help?
Tax Punjabi offers complete payroll services for small businesses.