Top 10 Tips For Mastering Year-End Payroll for Your Small Business

No small business owner or payroll manager in their right mind ever looks forward to year-end payroll processing in Canada.

No small business owner or payroll manager in their right mind ever looks forward to year-end payroll processing in Canada. There are so many things to do, a lot of regulations to keep in mind, forms to fill out, and math to do. As if those were not enough, the entire process is also scary. A simple error can get you into major legal trouble.

However, year-end payroll processing is as inevitable and critical as it is annoying, exhausting, and scary. This is why you have to make sure that your company is doing it the right way. Even if you have, say, an HR service provider, you still have to be hands-on during year end. You will still be liable for any error your vendor makes.

Luckily, the Canadian government has provided all information relevant to payroll available online. In addition, here are a few valuable tips for pulling off year-end payroll with flying colors.

Start with a plan.

Year-end payroll processing sounds like an insurmountable hurdle, especially if you are new to business. However, you can easily manage it by breaking it down. Break up this giant task into small subtasks, delegate these small chunks of work to certain individuals, and set a completion date for each of them.

You can use anywhere between a simple list of tasks not unlike your phone’s notepad app and a sophisticated Gantt chart that you can show during a quick meeting with the employees or vendors involved.

Include people in your planning.

As mentioned, year-end payroll is an extremely crucial and sensitive process. (It applies throughout the year, actually.) Therefore, you need to make sure that you are delegating to the right people. Choose employees whose credentials, qualifications, and not to mention, work ethics, are suitable to the task at hand.

If you already have an HR service provider, then simply communicate with them to make sure that they have everything they need. Find out what you need to prepare, and submit the necessary documents to them promptly.

Educate and train your HR staff.

If you do decide to do your year-end payroll processing in-house, then make sure that your HR department is ready. There are many consultancy agencies offering resources, such as informational materials, seminars, classes, and webinars, that you can have your employees attend.

It is also ideal to keep abreast of any changes in laws and regulations through third-party agencies or by regularly checking the website of the CRA, among others.

Prepare a reference file.

Have a reference file handy. Depending on how long you have been in operation and how experienced you are in HR payroll processing in Canada, this reference file can range from a stapled two- or three-page document to tens of bond paper in a binder.

You decide how much information to put in this reference file. You can choose to list the names of every single form you need (There is a lot!) or simply write down general categories. The important thing is that your whole team should understand your file. That way, everyone is on the same page (literally!), and no misunderstandings arise.

Hold meetings regularly.

Meet up with the individuals you have assigned year-end payroll tasks to. Ensure that everything is going smoothly and on schedule. This way, all possible conflicts are immediately raised, and solutions can be found immediately, if needed. You may also hold one-on-one meetings to make sure that each individual is progressing well.

Involve the whole team.

Although we advise delegating tasks to certain individuals only, that does not mean that all your other employees should not have to work. Have each worker validate and, if needed, update their information on file, one of the most important of which is the social insurance number.

This step is important, especially if you hired and/or lost people, if there were name changes, marriages, divorces, and the like. Moreover, validate all contact information, especially for new hires and contract employees.

Check your tax information.

Validate the tax information of your business. This tip is especially vital if you recently branched out in another state or jurisdiction, for example. Pay attention to any changes in legislation as well. As mentioned, the CRA has a very comprehensive and intuitive online portal where you can find all the resources necessary for payroll processing.

Ensure the validity of tax IDs and the accuracy of all legal information. Also, make sure that lived- and taxed-in locations match for all employees.

Do not forget other tax-related items.

There are certain items that may lead to tax adjustments. These include deferred compensation, equity transactions, taxable fringe benefits, and third-party sick pay. Do a thorough sweep of your HR system to see if there are any recovery opportunities for employee overpayment (if any) and ongoing severance agreements, for example.

Make sure everything adds up and is filed properly.

Look at bank documents, and reconcile everything. Balance your payroll tax remittances against your register. Look at all manual and voided check, and update payroll if needed. Pay attention to WCB/CSST awards that were reimbursed that year, and do an audit of all payroll deductions. These are just some of the things you need to balance and reconcile during year-end payroll processing.

You also have to ensure that all forms are correctly completed and filed. Take care of all jurisdictional reporting tasks.

Reward your year-end payroll team.

Now that you have successfully completed all year-end payroll processing tasks, celebrate and show your payroll team some appreciation for their hard work. Finally, prepare for a new payroll year.


Like every other function of a business, year-end payroll processing takes a lot of practice to master. It is definitely daunting during your first few attempts at it, but it soon becomes easy if you pay enough attention.

By following these tips, you are ensuring the benefit of not just your business but also your employees. You get to avoid potentially costly legal risks and unnecessary trouble with your workers.

Get A Quote Within 24 Hours

Request A Quote Today!

Follow Us On Social Media