//

What is Payroll?

4 mins read

This article provides you with a brief understanding of what payroll is and the different components and resources available to assist businesses to processing payroll accurately.

If you have a business in Canada that employs only Artificial Intelligence, chances are you will not have to pay them for the work that is done… not yet at least. However, if you employ people, chances are you will have payroll.

Payroll is defined as the total compensation companies are required to pay their employees for a set period of time, which is based on the hours worked for the business. To expand on this, depending on your company’s total rewards programs, employees may also receive pay for these programs such as premiums, uplifts, allowances, and fringe benefits.

There are many expenses that a business incurs throughout the year and payroll is generally the most expensive cost. Though, it is almost always a deductible from the business’s income. What this means is that the expenses incurred from payroll may be deducted from the businesses gross income which lowers the taxable income for them!

One of the benefits of completing payroll in Canada is the various payroll regulations and resources publicly available for businesses to use in order to help make payroll processing easier to follow and understanding how payroll should be administered.

The payroll regulations implemented ensure that whoever is processing payment understands how employees should be paid on a regular basis, this outline what should be deducted from an employee with each pay period. The resources that are available provide businesses with further knowledge around supplementary pay and how it should be paid to the employees. Visit the CRA website for further information on payroll.

The Canadian Payroll Association (CPA) works as a conduit between the government and business to ensure processing pay is efficient and the administration is easy to follow. There are various components in place to ensure that your businesses Payroll is set up and processed accordingly such as:

    • Ensuring your business has a Business and Canada Revenue Account (CRA) number
    • Ensuring your business collects accurate Personal Identification Information (PII)
    • Ensuring your business has the correct payroll policies in place
    • Gathering accurate employment information
    • Gathering hours worked, including work schedules and any overtime hours worked
    • Tracking Paid Time Off
    • Ensuring your business deducts Fringe Benefits (i.e., Group Benefits, RRSPs)
    • Ensuring your business deducts Government Statutory taxes (i.e., Income Tax, CPP, and EI)

Businesses are responsible to ensure their employees are paid and taxed accurately with each pay.

Now, there is more to payroll than just assuring employees are paid accurately, this function is also responsible for remitting taxes to the CRA on time, processing year end reconciliations, T4s, ROEs, and garnishment calculations. When it comes to these calculations and remittances, it would be beneficial for the businesses to have these completed with each pay period, as the company could face financial penalties if they are not done in a timely manner.

There is a great deal of information and moving parts involved in Payroll. Knowing what is needed is only half the battle, for the other half look for our series on “Setting Up Payroll”, as we will be breaking down the different payroll components and policies that your business should consider documenting, so you too can setup your own successful payroll process.

Latest from Featured Posts

Login / Logout

Previous
Next
Previous
Next

Do You Want to Learn More About Membership? Click Here

Do You Want to Learn More About Membership? Click Here

How Can We Help?

Please Call or Write: 1.833.441.2442 support@bigcorplife.com