A payroll system is an integral part of all organizations. This system is responsible for employees’ salary compensation, and also plays a vital role in protecting the company’s reputation by ensuring compliance with various legislations. Payroll affects every aspect of your business, from the goodwill of the company right down to the morale of its employees. If you have a small business, you too can set up a small business payroll system. When you set up a small business payroll system, it becomes easier to maintain as you grow in future. Here are steps to set up a payroll.
Registering with Canada Revenue Agency (CRA)
You must have a Business Number (BN) and a Payroll Program for your company by registering with CRA. A Business Number is a unique 9 digit number, used to identify a company for tax matters in Canada. In a Payroll Program, you need to gather some information and decide your first remittance due date. The following information is required for a payroll account.
The steps to set up a payroll account can be done online as well.
The next step is to collect the Social Insurance Number of your employee and file Personal Tax Credit Return. Once you’re done, you can go forward with calculating the deductions. CRA has an online calculator to estimate tax deductions. Ensure that you have the information regarding employee province in order to calculate proper deductions. Use the payroll deductions online calculator to determine your share to deduct from each pay period. For this, you must know the provincial and territorial location of the your employee.
Remitting Payroll Deductions on Time
You need to remit Canadian Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and Income Tax Deducted from your employee. In order to decide your remittance date and frequency do the following:
In case you need any help in the above points take services of a professional firm. You will have to pay high penalties if you are late in remitting your employees payroll deductions. The penalty is as follows.
Follow the above steps to set up a payroll system. Setting a payroll is a complex and time consuming task but it is beneficial to both the organization and the employees. So, if you need assistance to set up a small business payroll system, consult a specialized bookkeeping firm.