Payroll in Canada: How do I register my Canadian business to run payroll?

Starting a new business in Canada? Payworks’ five-part “Payroll in Canada” series is here to guide you through each step of the payroll process – from registering your business to generating T4s and beyond.

Whether your new business vision is just starting to take shape or you’re officially up and running, congratulations! We know how exciting – and challenging – a Canadian entrepreneur’s journey can be… and that’s why Payworks is here to support you every step of the way.

In this first entry of our “Payroll in Canada” series for new businesses just like yours, we’ll cover:

• How do I obtain a Business Number with the CRA?
• Do I need to register my business with my province or territory?
• How often should I be paying employees?

And make sure to keep your eyes open for the upcoming articles in our series – all of which will help take the guesswork out of payroll and help you get back to what got you into business in the first place. We’ll cover how to select a payroll system, what information you need to set up your payroll, how to run your first pay and generate your first year-end tax forms (T4/RL-1) and Records of Employment (ROE)… and how to remain legislatively compliant in the process!

But in the meantime, let’s dive into the questions we usually hear first from new business owners.

How do I obtain a Business Number with the CRA?

The first step of setting up your payroll is to register your business and obtain account numbers with government bodies in order to make sure the right information is transmitted, the correct deductions and contributions are made on time, and the accurate amounts for remuneration are paid out to employees.

In order to run a business in Canada, every company must obtain a business number (BN) through the Canada Revenue Agency (CRA). The fastest and easiest way is to register online through the CRA’s Business Registration Online (BRO) system. Once registered, you can access various program accounts, including those which allow you to calculate and remit source deductions destined for the federal government.

Do I need to register my business with my province or territory?

Depending on your jurisdiction, you may need to also register your business for the purposes of income tax deductions (such as in Québec), various remittances including those related to employer health taxes and other specialized provincial or territorial programs.

Workers Compensation Board (WCB) remittances are under provincial and territorial jurisdiction and can go by different names depending on your region. For more information organized by jurisdiction, see our breakdown by province.

British Columbia: Employers with remuneration greater than a set amount determined by the B.C. government in a calendar year must register for an employer health tax (EHT) account through eTaxBC.

Manitoba: Employers with a total yearly remuneration amount above the set threshold are required to pay the Health and Post Secondary Education Tax Levy (HE Levy). The tax rate is based on your total yearly payroll. If your organization meets the requirements to pay the HE Levy, you’ll have to register with TAXcess.

Newfoundland and Labrador: Employers in Newfoundland and Labrador are subject to a Health and Post Secondary Education Tax (HAPSET) when an employers’ annual remuneration in the province exceeds a predetermined exemption threshold. Businesses remitting HAPSET must register their business with the province’s tax service.

Northwest Territories: Businesses operating out of the Northwest Territories must register for the Payroll Tax within 21 days of the first remuneration payment to an employee. Registration is done by filling out and sending in the Payroll Tax Registration Form.

Nunavut: Businesses operating out of Nunavut must register for the Payroll Tax within 21 days of the first remuneration payment to an employee (but heads up: any employer registered for Payroll Tax in the Northwest Territories after April 1, 2019 has been automatically registered for the Nunavut Payroll Tax!). To register, all you need to do is fill out and send in the Payroll Tax Application Form, available on the Payroll Tax information page.

Ontario: Employers in Ontario need to determine if they’re required to register for and remit to the Employer Health Tax (EHT) program. For more information on this tax, including how to register, visit the Employer Health Tax website.

Québec: If you’re doing business in Québec, you’ll have to register your business with Revenu Québec. Registration can be done online and will give you access to information on the various source deductions, income tax and consumption taxes you’ll need to keep in mind.

Beyond income tax deductions, the province also has a few different remittances that need to be paid out by the employer. Your business must be registered with Revenu Québec and signed up for source deductions through ClicSÉQUR. Remittances below must be paid if your employee(s) report(s) for work to or is paid from a work establishment located in Québec.

For more in-depth information on Québec’s payroll legislation, including the Health Services Fund (HSF), Québec Pension Plan (QPP), Québec Parental Insurance Plan (QPIP) and Employment Insurance (EI), labour standards and CNESST, please refer to our Québec legislation article – it contains all the info (and links) you need to get started.

How often should I be paying employees?

Payroll frequency, or how often you will be paying your employees, needs to be determined early-on to help determine your remittance schedule to the government. Taking a look at a few key facets of your business can help you determine the best fit. For that, we put together an article entirely dedicated to the ins and out of payroll frequency and how to find the best fit for your business.

As mentioned, the next installment of this “Payroll in Canada” series will cover payroll systems with a look at the main options available to business owners – along with how to determine which might be the best fit for you – so make sure to stay tuned to our blog!

With the right setup, tools, support and knowledge, Canadian business owners can manage payroll confidently and avoid costly mistakes. Find out how Payworks can help turn the labyrinth of payroll into a clear road on a sunny day.