What qualifies as a small business?
Defining a small business can depend on who you're asking. For instance, the Canadian Bankers' Association defines a small business based on a monetary threshold and other institutions may define it differently as well. The generally accepted marker for gauging if a business is included in the small business club comes down to the number of employees a business has. But wait! Even that can vary a little bit.
For companies that produce goods, a small business means they have 100 or fewer employees. For service-based companies, that number is even smaller, with a small business having only 50 or fewer employees.
If you fall somewhere within these numbers for your type of business, congrats! You have a small business.
Building blocks of small business payroll.
Things to keep in mind while you get started.
Amounts deducted from an employee paycheque and paid to the government by the employer.
An individual hired by a business with a set wage and salary with hours determined by the business.
An independent worker paid for services rendered to a business.
Payroll program account.
A CRA account number related to a business to identify payroll filings.
When you must remit payroll taxes to the government to remain compliant.
Amounts withheld from employee paycheques for things like CPP and EI.
What is small business payroll?
Whether you have 5 employees or 100, they need to get paid. There are a few steps to making that happen, starting with setting up a payroll program account with the Canada Revenue Agency (CRA), understanding government requirements (such as payroll taxes and remittances) and knowing how to handle employees and potentially even contractors.
Payroll program account: What is it?
This is your payroll identity with the CRA. A payroll program account is a CRA-issued number given to an employer (or others who deal with paying employees) so that they know who they're dealing with. It includes your nine-digit business number + RP (to show that it's for a payroll program number) + a four-digit reference number for each individual payroll program account. For example, it might look like: 12345 6789 RP 0001. You must register for and set up a payroll program account before your first remittances are due with the CRA.
The good news is you don't have to arbitrarily try to figure out what amounts to deduct from employee paycheques for your payroll taxes, nor when to pay them. The CRA outlines both the tax deduction calculations as well as your remittance schedule (in other words, when you file payroll taxes withheld from employee paycheques).
For most employers, remittances are due on the 15th of the following month. As an example, January's tax remittances would be due on February 15th. There are instances where the CRA may change the payroll tax filing frequency and schedule for your small business. In those cases, they'll get in touch with you.
Employees and contractors: What's the difference?
An employee is someone hired by your business to work for the business. Typically, they'll have set hours, a set wage, and deductions taken from their paycheques for things such as Employment Insurance (EI) and the Canadian Pension Plan (CPP).
A contractor, on the other hand, is an independent worker who is hired and paid only for service rendered. They don't have a set income from your business and are responsible for submitting their own taxes to the government. They can often set their own work hours as well.
Make small business payroll happen with Wagepoint.
Wagepoint is an easy-to-use payroll software that's here to make the payroll magic happen. Built with small business payroll in mind, Wagepoint has built-in features for payroll needs from employee and contractor setup to tax remittances to employee forms to direct deposit… the list goes on and on.
Payroll isn't why you started your business, but it's a part of it all the same. With Wagepoint, processing payroll can take minutes, and you can have the confidence that employees, contractors and taxes are paid and paid on time.
Small business payroll magic with Wagepoint.
Support is very helpful in assisting me through the corrections. Anytime I've had to contact support, they are always very responsive and provide the requesting information the first time.
Gary Crandall, Atlantic Tennis Centre
Using software like Wagepoint makes it effortless and frees business owners up to do the things that help the business grow. Taking five minutes to run payroll for 10 staff is pretty empowering. By making this process so easy I can focus on marketing and grow my business while others waste time and resources to do something that could be so easy.
Alex Ross, Fresh Adventures
Wagepoint takes care of sending in the payroll deductions, filling out the T4s, pay stubs and ROEs. You can get reports whenever needed that give you a picture of what's going on with your payroll at any given time. Everything is so much easier with Wagepoint.
Julia Moore, Canadian Security Systems Ltd.