Introduction
Hiring employees is an exciting milestone for any business, but it also comes with responsibilities, including payroll compliance. Registering for a payroll account with the Canada Revenue Agency (CRA) is the first step to meeting your employer obligations. This guide explains the process, requirements, and tips to help you get started.
What is a Payroll Account?
A payroll account is a program account under your business number (BN) that allows your business to remit payroll deductions to the CRA. These deductions include:
Income Tax: Withheld from employee wages.
Canada Pension Plan (CPP) Contributions: Both employer and employee portions.
Employment Insurance (EI) Premiums: Both employer and employee portions.
Without a registered payroll account, you cannot legally deduct and remit these amounts to the CRA.
Who Needs to Register?
You need to register for a payroll account if:
You pay employees (including yourself as the business owner if you are on payroll).
You provide taxable benefits, such as vehicle allowances or health benefits.
You offer bonuses, commissions, or other forms of taxable compensation.
Even if your employees are part-time or seasonal, you must register for a payroll account to handle their deductions.
How to Register for a Payroll Account
Step 1: Obtain a Business Number (BN)
Before registering for a payroll account, your business must have a BN. If you don’t already have one, you can register for a BN online through the CRA’s Business Registration Online portal.
Step 2: Register for the Payroll Program
Once you have a BN, follow these steps to register for a payroll account:
Online Registration:
Visit the CRA’s My Business Account portal.
Log in or create an account.
Navigate to the “Payroll” section and complete the registration form.
Phone Registration:
Call the CRA at 1-800-959-5525 to register over the phone.
Mail or Fax Registration:
Download Form RC1 (Request for a Business Number) from the CRA website.
Complete the form and indicate “Payroll” as the program you wish to register.
Submit the form by mail or fax to your regional tax services office.
Step 3: Receive Your Payroll Account Number
Once your registration is processed, you’ll receive a payroll account number, which is an extension of your BN (e.g., 123456789RP0001). This number is used to remit deductions and file payroll-related returns.
Key Deadlines for Payroll Remittances
As a registered employer, you are required to remit payroll deductions to the CRA. The deadlines depend on your remittance schedule:
Regular Remitters: Monthly remittances are due by the 15th of the following month.
Accelerated Remitters: Some businesses with larger payrolls may need to remit bi-weekly or even weekly.
Late remittances can result in penalties and interest, so it’s crucial to adhere to these deadlines.
Common Pitfalls to Avoid
Failing to Register Early: Register before you pay employees to avoid compliance issues.
Incorrect Deduction Calculations: Use CRA-approved payroll software to ensure accuracy.
Late Remittances: Set reminders to ensure payroll deductions are remitted on time.
Tools to Simplify Payroll Management
Consider using payroll software to streamline compliance and minimize errors. Popular options include:
QuickBooks Payroll: Integrates seamlessly with accounting systems and automates deductions.
Ceridian Dayforce: Ideal for businesses with more complex payroll needs.
Wagepoint: A user-friendly option for small businesses.
These tools calculate deductions, generate pay stubs, and track remittance deadlines.
Conclusion
Registering for a payroll account is a crucial step in meeting your responsibilities as an employer. By understanding the registration process, adhering to deadlines, and leveraging tools, you can ensure compliance and focus on growing your business. At CA Hub, we offer expert support to help businesses navigate payroll registration and management. Contact us today for personalized assistance.
Disclaimer
This guide is intended for informational purposes only and does not constitute legal or tax advice. While every effort has been made to ensure accuracy, tax laws and regulations are subject to change. Please consult a qualified tax advisor or legal professional for advice tailored to your specific situation.