Whether you operate a limited company or as a self-employed individual in Canada, if you hire someone to help with your business, you automatically assume the role of an employer and are required to pay wages.
What do employers need to be aware of when it comes to payroll?
Employment Contract: A written employment contract is essential.
Payroll Program Number: Once you've applied for a payroll program number, strict adherence to labor laws becomes mandatory to avoid significant risks.
Employer Remuneration: Employers can pay themselves on an hourly or monthly basis as per company policy. However, as per tax regulations, personal income tax and CPP contributions must be withheld. EI contributions are not mandatory for the employer. The amount of salary can be determined based on the company's size and tax burden. For employees, in addition to personal income tax, CPP, and EI contributions, the company must match the CPP contributions and contribute 1.4 times the amount of EI. It's crucial to note that government rates for CPP, EI, and income tax are adjusted annually, so tax deduction rates should be updated every January.
WSIB (Workplace Safety and Insurance Board): Please click here to download the Chinese manual.
Employer Health Tax (EHT)
Timely Remittances: Payroll taxes in Canada carry severe penalties for late payments. Timely and accurate remittances are crucial.
Note: Payroll taxes in Canada are strictly enforced. Failure to comply can result in significant penalties.
WSIB Application: Please click here for the application.
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