When you are the owner of a small business or just starting with your own business, you have many items that need to be considered in your day-to-day operations. Taking care of your clients, running the office, making sure you have supplies, scheduling, marketing, and the list can seem endless. If you have employees working for you, there are even more tasks you need to perform. If you are an employer, it is important for you to understand all the Canada payroll deductions that you must include in every paycheck for your employees.

Once you hire your first employee, you become responsible for making sure that their paychecks are correct. Not only do you want to make sure their wages are right, but there are several items that need to be included. Forgetting about these things can cause you great difficulty down the road.

Perhaps one of the most important deductions you need to remember to take when considering payroll is the income tax. Every wage earner is responsible for paying this out of their paycheck. It is the responsibility of the employer to make sure the correct amount is applied to each person’s pay.

Another item that needs to be included is the contribution to the Canada Pension Plan, also known as the CPP. This is the national retirement plan that employees are a part of, similar to the Social Security system in the United States. There are some regulations that need to be followed pertaining to the CPP.

An employer must take CPP contributions from an employee’s pay if that person meets certain criteria. If that person is between the ages of eighteen and seventy, is in pensionable employment, is not considered to be disabled and does not already receive a CPP pension, then you must make the proper deduction. The employer is also responsible for contributing the same total of CPP that is withheld.

A third payroll deduction that needs to be calculated is one involving Employment Insurance, or EI. EI premiums must be taken from any insurable earnings for each dollar up to the maximum allowed for that year. The employer should also add 1.4 times the premium that is withdrawn for each worker.

All of these payroll deductions and employer contributions must be remitted to the Receiver General by a specified date. The dates are based on when your employees is actually paid for their services, or their payday, and not the pay period of your business. There are also several types of remitters. These are determined by the Average Monthly Withholding Amount, or AMWA, of your business of two calendar years past.

Understanding Canada payroll deductions can be a daunting task. If you are new to starting business and have never had to perform these duties before, it may seem a little confusing to you at first. It may be best to seek the advice of a professional service on how best to organize and proceed so you do this properly.

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Are you looking for more information regarding Canada payroll deductions? Visit http://smallbizproscalgary.ca/ today!

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Category: Finances
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