As a responsible employer, you should have at least a rudimentary understanding of the process to be able to answer them comprehensively each time.
It is important that you understand payroll in Canada. That is not to say that Canadian laws are not to be trusted. In fact, there are quite a number of regulations and regulatory bodies in the country that ensure that businesses do not end up overpaying and employees are not underpaid.
However, knowing how payroll works is still beneficial regardless of the size of your business. Although payroll systems are all automated nowadays, you are bound to encounter questions from your employees every now and then about what goes into and what gets taken out of their pay.
As a responsible employer, you should have at least a rudimentary understanding of the process to be able to answer them comprehensively each time. We have put together this brief guide about employee payroll in Canada to hopefully assist you in addressing such inquiries from your workers.
What You Need
You do not need much other than the following:
- Statements of earnings
- Your books
- The payroll deduction online calculator (PDOC)
You can always use sample figures when doing calculations, but having your company’s actual documents handy means that you get realistic figures each time. Also, by using your own numbers, you can immediately tell if there is anything off with your calculations.
#1 Input general information
The system will ask for your employee’s name, your business name, province or territory, pay date, and pay period frequency. The employee and employer name fields are optional. The rest are required fields.
The location is where your business is located or where your employee reports for work. It is important that you get this right because of applicable regulations. Needless to say, the pay date and frequency are of utmost importance because they also have a direct effect on your worker’s pay.
#2 Enter the gross income
Input the salary or wages income without deductions (required field). Also, enter vacation pay, if any, for that period. There are additional options in the form, which are bonus and retroactive payments, and no bonus and retroactive payment options. There is a list of other taxable income, benefits, and deductions. Select all that apply for the period you are calculating for.
Unfortunately, only one calculation can be done at the same time by the calculator. If your employee has a bonus and a retroactive payment, you will have to exit and go back in.
#3 Enter supporting information
The form branches out at this point depending on what you selected in the previous screen. This is where you are going to need all the documents you prepared beforehand. Make sure to enter all numbers accurately. Paying incorrect salary can have serious consequences, and the reliability of the online calculator is just as good as the accuracy of your figures.
#4 Supply other information
The form will now ask for information related to provincial tax credit return, CPP or QPP, and EI. like in the previous step, make sure to check your numbers thoroughly and enter them accurately to avoid mistakes.
#5 Get the result
The calculator will now display results showing payroll deductions and employer remittances separately. The files can be saved as PDFs.
#6 Do it again
If you need to make changes, make a different calculation type, or calculate the salary of another employee, select “Modify the current calculation,” “Start over,” and “Next calculation,” respectively.
If you are not a fan of math, you can always just buy payroll software for your company. There are plenty of options on the market today, and applications are becoming cheaper as technology advances. However, you should not fully rely on computers.
Knowing how to calculate your employees’ payroll yourself is useful because it gives you an idea of what goes in and out of their pay and can explain it to them. It is also a great way to check if your numbers are adding up.
This wraps up our introduction to calculating employee payroll in Canada. We hope you found this review useful, and we highly encourage you to check out the resources we have linked out to in this article. Feel free to share this with other business owners you know!