Payroll

Payroll for Small Business Owners: What You Need to Know Before Hiring in Ontario

Hiring your first employee is an exciting milestone for any small business in the Niagara Region. Whether you are expanding a contracting company in St. Catharines, adding staff to your retail shop in Welland, or bringing on seasonal help for your Niagara Falls tourism business, setting up payroll correctly from day one is essential.

Many first-time employers underestimate how much is involved with payroll. From TD1 forms to CRA remittances and year-end T4 slips, getting it wrong can lead to penalties, extra paperwork, and unnecessary stress. Here is what you need to have sorted before that first payday.

1. Register for a Payroll Account with the CRA

Before you pay your first employee, you must register for a payroll account with the Canada Revenue Agency. This is separate from your business number and HST account.

Once registered, the CRA will give you a payroll program account number. You will use this to remit payroll deductions such as income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums. Most small businesses in Niagara can register quickly online through the CRA My Business Account.

2. Collect TD1 Forms from Every Employee

Each new employee must complete a TD1 Personal Tax Credits Return form. This tells you how much income tax to deduct from their pay. There is a federal TD1 and a provincial TD1 for Ontario. Employees can claim basic personal amounts plus additional credits for things like dependents, tuition, or medical expenses.

Accurate TD1 forms help prevent under- or over-deducting tax, which can cause problems at tax time. Keep these forms on file and update them if your employee's situation changes.

3. Understand CRA Payroll Remittances

As an employer, you are responsible for deducting and remitting the following on time:

• Income tax
• CPP contributions (employee and employer portions)
• EI premiums (employee and employer portions)

Remittance deadlines depend on the size of your payroll. Most small businesses in Niagara remit monthly. Missing remittance deadlines is one of the fastest ways to attract CRA penalties, and interest compounds daily on late payments. Check the 2026 CRA deadline calendar for exact remittance dates.

Deduction Type	Who Pays	Typical Frequency
Income Tax	Employee	Monthly
CPP Contributions	Employee + Employer (matched)	Monthly
EI Premiums	Employee + Employer (1.4x employee amount)	Monthly

4. Keep Accurate Records and Pay Stubs

You must provide each employee with a pay stub that clearly shows gross pay, deductions (tax, CPP, EI), net pay, and pay period dates. Good payroll records also make it much easier to prepare accurate T4 slips at year-end.

5. Prepare for Year-End T4 and T4A Slips

Every February, employers must issue T4 slips to employees for the previous calendar year. These slips report earnings and deductions so employees can file their personal taxes.

• T4 slips must be given to employees by the last day of February.
• The T4 Summary must be filed with the CRA by the last day of February.
• If you pay contractors, you may also need to issue T4A slips in certain situations.

What to Do Before You Hire

• Register your payroll account with the CRA.
• Choose a payroll system or work with a bookkeeper who handles it for you.
• Understand your remittance schedule.
• Set aside extra funds for the employer portions of CPP and EI.