Payroll Tax Tips: Hiring your First Employee

Posted in General, Payroll, Personal Tax Canada

Before you hire your first employee, make sure you know what  payroll tax you are responsible for as an employer. And see if you are eligible for tax incentives or grant money that is available.


Your business is growing and it is time to hire your first employee! As the owner of a small start-up business, writing a job description for your first employee is one of the hardest things to do.  However, there are a few other decisions as a new employer you need to consider before you even start to interview job candidates.  There may be money available to put towards the salaries of this new employee, and there are definitely payroll taxes that you need to manage and cost into this new business expense.  Knowing your payroll tax obligations as an employer, and your management processes, are important before you hire your first employee.

Are there financial or tax incentives for hiring an employee?

There are various tax incentives, hiring programs, and funding options for employers that have been put in place to stimulate job development in our workforce to help our economy bounce back.  Apprenticeship training, training young people, hiring a co-op student and other programs are available. There is  $10,000 of Ontario government grant money available to help subsidize the cost of certain employee training programs. 

Read More - www.ontario.ca -  Hiring Incentives for Employers  ,  www.cfib-fcei.ca - Offset Training Costs with Canada Job Grant

What employee taxes are Ontario business owners obligated to pay?

Here is a list of some of the taxes Ontario business owners must review to see if they are eligible to contribute.   Employers are obligated to submit payroll remittances that include both the employee and employer’s contributions.  Eligibility and amount are based on business industry, employee salaries, location, and other criteria.


Other industry-specific taxes may apply to your business.  Make sure to review the links above and consult with your accountant to learn what you need to do to meet the provincial and federal employer tax requirements.

If your employee receives in-kind benefits such as reimbursement of personal expenses, free use of personal property or an allowance, these amounts may be considered taxable.  If they are considered taxable, a fair-market value will need to be assigned and applied toward that employees’ income.  Ask your account for more information on how to apply source deduction when considering this type of incentive for your employee.

Read More - www.cra-arc.gc.ca - Payroll Tax Deductions

Do you have a plan to manage your payroll tax deductions?

Registering for a payroll account number, collecting the required personal employee information, understanding what payroll taxes are required to be submitted and when, are just some things that an Ontario business owner must do when they have employees.  If deadlines are missed, or inaccurate information or amounts are remitted, there can be considerable financial penalties.  It takes a considerable amount of time and expertise to manage payroll deductions. McEvoy, Lelievre and Associates payroll service experts assist business owners to help them understand and manage their payroll obligations with the goal to reduce the paperwork stress that this can cause to a business.

More information can be found in this Comprehensive Canada Employer Payroll Guide 

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