How to Run a Payroll – from paper & pen to automated payrolls

Congratulations on hiring your first or your fiftieth employee!  You must learn how to run payroll that complies with government regulation. As you may already know, the Canada Revenue & Agency and Service Canada requires you to calculate and withhold the Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and income tax deductions based on the amounts you pay your employees. You also have to calculate your share of CPP and EI.  Periodically, you will need to remit the CPP, EI, and taxes withheld from your employees.  Furthermore, you have to report the employees’ earnings and deductions on a T4 or T4A on an annual basis.     These requirements are expected from your first day as an employer – there is no allowance to get up to speed.

Many Options

There are many ways to calculate a payroll from paper and pen to fully automated service providers.  Here are some of the most popular ways we process our client’s payroll:

Manual Payroll Process – otherwise known as the PDOC or Payroll Deductions Online Calculator.   Canada.ca has an online payroll calculator tool that may be suitable for the smallest payrolls.   The PDOC will calculate one payroll’s net cheque, withholding tax and employer payments.   The service does not calculate year-to-date amounts, total payrolls and when CPP/EI limits are reached nor will it prepare year-end reports such as T4s.   It’s our recommendation that this only be used for the simplest payroll.   The long-term bookkeeping costs of manual record-keeping outweigh the cost savings of this free service.

https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/payroll-deductions-online-calculator.html

Use a dedicated payroll service – such as Ceridian or ADP who are stand-alone full services payroll providers.

Use the payroll service included in your accounting software – we use QuickBooks Online Payroll.   QBO Payroll handles the calculations, direct deposits cheques, emails paystubs, has great reporting and prepares T4s automatically.

Use a business payment processor’s payroll service.    We use Payment Evolution to pay our client’s vendor payments electronically.  Payment Evolution is a service that securely and electronically pays your suppliers using direct deposit providing your business with easy secure auditable payments.   Payment Evolution will run your payroll for the normal costs of business payment.    Payment Evolution is the most affordable payroll calculator with all of the features such a direct deposit, emailed paystubs and annual reporting.

The best way to run a payroll

Use our bookkeepers to provide end-to-end customer service.   We can onboard your employees, get them set up on a time tracker, send their hours to you for approval, direct deposit their payroll, submit your withholding taxes and file your T4s.   All done quickly and efficiently, saving most business owners 4 hours a week.

We can help you choose the right tools to process your payments and manage your payroll process.  The right solution balances the costs with a minimization of the time the owner needs to commit and keeps you in compliance with your tax and reporting requirements.

Contact us to get started on a payroll solution that’s right for you.

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