Affordable Accounting and Bookkeeping
The Payroll Processing Guide
Understanding your Responsibilities and How Payroll Works
The following steps will explain your responsibilities and how payroll works. Read carefully to know the rules regarding the payroll and avoid any negative consequences or penalties.
Step 1: Determining Your Status
This step is to establish your status. Are you an employer, payer or a trustee?
Step 2: How to Open a Payroll Program Account
Regardless of who you are - an employer, trustee or payer, the second step is opening a payroll program account.
Step 3: How to Hire Employees Correctly
This section will help you do everything right when dealing with the hiring process of your employees.
Step 4: How to Calculate Deductions
As an employer, you have the sole responsibility to calculate and withhold the Canada pension plan(CPP) income tax deductions, premiums, contributions along with employment insurance (EI) premiums. Calculating your share of CCP and EI is also important.
Step 5: How to Remit Deductions
Remitting deductions is very crucial and you have to remit income tax, CPP contributions and EI premiums you deducted, along with your share of CPP contributions and EI premiums (as stated in step 4).
Step 6: How to Complete and File Information Returns
Filing information returns starts with reporting the employees' income, deductions on the T4 or T4A slip. You can learn more about this step here: Completing and filing information returns.
At any point in time, keep records of everything you do. In case, you find it difficult to understand what's worth keeping and what's not, and how to keep your records correctly, check some useful tips here.