Payroll services in Kitchener-Waterloo

Hiring in co-op cycles

Waterloo Region employers hire students on co-op terms more than employers almost anywhere else. That gives payroll a rhythm of its own: a group of new employees three times a year, each needing a TD1, a payroll record and a final pay with vacation pay at the end of the term. Co-op students are employees, not contractors, so CPP, EI and income tax are withheld as for anyone else, and the T4 is issued even if the student has left the province by February. Setting up each cohort cleanly is routine. Doing it from scratch every four months is where errors creep in. If this is your first hire, hiring your first employee sets out the registrations.

Equity pay runs through payroll too

When an employee of a public company exercises options or has share units vest, the benefit is employment income and is reported on the T4. The employer generally has to withhold tax on it even though no cash changed hands. For an option from a Canadian-controlled private corporation the benefit is usually deferred until the shares are sold, but it still belongs on a T4 in that later year. A startup’s payroll needs to know about the equity plan, not just the salary list.

Employer Health Tax is chosen before the exemption

Ontario’s Employer Health Tax has a feature that catches growing employers out. The rate is picked from a table using total Ontario remuneration before the exemption is deducted, and only then is the exemption subtracted from the taxable base. A startup or a manufacturer that doubles its headcount in a year can cross the exemption mid-year and owe a tax it had never budgeted for. We track remuneration as it accrues and set up EHT instalments when they become due. The rate table is on the Ontario tax facts page.

A founder with an operating company and a second company, or a contractor with a separate equipment company that also has staff, may find the EHT exemption is shared. Associated employers must allocate the one exemption between them, and where the group’s total Ontario payroll is large enough no exemption is available at all. The same associated-group question also affects the small business deduction on the T2, so it is reviewed once, for both. For a plant or a shop adding a second shift, the jump in remuneration is predictable, and the EHT that comes with it can be priced into the decision rather than found in the year-end review.

WSIB, from the shop floor to the site

WSIB coverage and premiums are separate from the CRA and from the Ministry of Finance, with their own registration, rate groups and reporting. Most employers with workers need an account. In construction, Ontario’s compulsory coverage goes further, reaching independent operators, sole proprietors, partners and executive officers in most cases, so a contractor with no employees may still need to register. Most farm operations with workers are covered as well. A clearance certificate from each subcontractor before paying them protects the hiring business from their unpaid premiums. See contractor accounting in Kitchener-Waterloo for the construction detail.

Employee or contractor?

Trucking companies, software startups and contractors all use people who could be either. The label in the agreement matters less than the facts: control over the work, who owns the tools or the truck, whether the person can hire help, and whether they can make or lose money on the job. Get it wrong and the CRA can assess the unwithheld CPP and EI against the payer. Employee or contractor sets out the tests. For carriers the question usually comes down to owner-operators, covered on trucking accounting in Kitchener-Waterloo.

What is covered

One Chartered Professional Accountant runs the whole cycle:

• Pay runs on your schedule, with pay stubs and direct deposit files
• Source deductions calculated and remitted to the CRA on time
• T4 and T4A slips and the summary by the last day of February
• WSIB reporting and premiums, and EHT once it applies
• Records of employment when someone leaves
• Payroll entries posted to the books each period

Remote, from Abbotsford

EverStone works from Abbotsford, BC, with no Kitchener-Waterloo office and no local staff. Timesheets and new-hire forms arrive through a secure upload link, remittances are made electronically, and questions go to the same CPA who runs the payroll. Payroll deadlines are federal and provincial, not local, so nothing about the work depends on being in the region. The remittance calendar shows the cycle.