What is it?

A payroll account, similar to an HST program account, is an account related to all payroll items through your corporation, it allows the Canada Revenue Agency to identify you.

When do I need it?

A corporation needs to register for a payroll account if they are an employer, meaning you pay salaries, wages, bonuses, vacation pay, tips, or other taxable benefits to your employees only, not contractors. Contractors are independant from your corporation and are not considered employees, you do not withhold payroll taxes from contractors and they typically handle their own tax liabilities.

If you have employee(s) under your corporation, including yourself, who you are paying salaries or wages, you must register for a payroll account before the first pay period.

Once you register, every pay period you must withhold certain payroll taxes including: CPP, EI and income tax, and remit that to the government. The employee(s) get paid the net amount of their gross salary less all those withholding taxes.

When is it due?

Due date to remit all these payroll taxes: 15th day of the following month you paid your employees (i.e. if employees got paid and you withheld payroll taxes on March 2, you must pay the government by April 15).

If you do not remit those payroll taxes on time, you may be liable for penalties and interest for the amount owing to the government.

At the end of the year, as an employer, you must issue tax slips that report your employee’s earnings and deductions, which they use for personal tax purposes. (Source)

Thankfully at Blinc, our experienced CPAs understand how to setup your payroll account, automatically deduct and remit withholding taxes on time, pay all your employees on time, and save you hours of time ensuring you are fully compliant. Sign up today!