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Payroll

Hiring your first employee in Canada: the accounts, the math and the deadlines

Put them on payroll, add a payroll account to your existing business number, and budget roughly 8% of salary on top. The 2026 numbers and the dates.

By Matthew Reeves, FounderAugust 9, 2026 · 8 min read
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Quebec runs its own corporate tax regime through Revenu Québec, and Cadence doesn't currently serve Quebec. The figures below are Ontario's.

Summary

Hiring someone means holding back part of their pay for the Canada Revenue Agency (the CRA) and sending it in on a date the CRA sets. On top of the wage, your corporation also owes contributions of its own to the Canada Pension Plan (CPP) and to Employment Insurance (EI). Here’s the sequence for a first hire working outside Quebec, the only case covered here. (Quebec runs on separate machinery, including a Revenu Québec account of its own and the Quebec Pension Plan in place of CPP.)

  1. Work out whether the person is legally your employee or a self-employed contractor, because only an employee runs through payroll. The CRA answers that on how the work is really done rather than on what your contract says, and our guide on that test covers it.
  2. Open a payroll program account. Opening one doesn’t get you a new number: the CRA adds RP, its code for payroll, plus four digits to the nine-digit business number your corporation already has (e.g. 123456789 RP 0001). If you already pay yourself a salary you have such an account, and the new person goes on it.
  3. Before paying them anything, collect their social insurance number and both TD1 forms, federal and provincial. The TD1s are what set how much income tax comes off each cheque.
  4. Take income tax, CPP contributions and EI premiums off each cheque. Your corporation then pays the same CPP amount again itself, plus 1.4 times whatever EI you deducted.
  5. Send both parts, what you held back and what your corporation owes on top, to the CRA on the schedule the CRA assigns you. The schedule is either the 15th of the month after the month you paid the wages, or one of four quarterly dates.
  6. Check whether your business has to register with your province’s workers’ compensation board. Which body runs the coverage, who has to carry it and how quickly it expects to hear from you are all set province by province, and your own province’s rule is stated further down, with a registration deadline where the board publishes one.1
  7. File a T4 slip for the year, the annual statement of what you paid and what you withheld, by the last day of February in the following year, with a copy to the employee by the same date. Payroll always runs on the calendar year, whatever date your corporation’s own year end falls on, and a deadline landing on a weekend moves to the next business day (e.g. slips for 2026 are due Monday March 1 2027).2

Budget roughly 8% of the salary as your corporation’s own CPP and EI cost. In our view a missed date costs a first-time employer far more than an arithmetic mistake, so settle who owns the remittance date before you settle anything else. Our cost of an employee calculator prices all of it for your own province, including the vacation pay and the workers’ compensation your board charges.

The payroll account, and what to collect first

A payroll program account is one of several accounts the CRA hangs off your corporation’s business number, which is printed on any letter the CRA has sent you. The account has to be open before your first payment to the CRA is due. Hiring on March 11 and running the first pay on March 25 puts that payment on April 15, the 15th of the month after the month you first held money back.3

Two things come from the employee before then (i.e. before that first payment is due). Their social insurance number is due within three days of the day they start work, and the two TD1 forms set the tax-credit code behind the income tax you hold back.4 You don’t work that income tax out yourself: the CRA’s free Payroll Deductions Online Calculator, or your payroll software, turns the salary, the province and the TD1 code into the figure for each cheque. The province in question is where the employee reports to work, which isn’t always where they live.

The deductions, and what one employee costs

Outside Quebec a pay cheque carries three deductions. Income tax comes off the employee and your corporation adds nothing to it, while CPP and EI cost your corporation a matching share on top.

CPP for 2026 runs at 5.95% from the employee and another 5.95% from the corporation. Both apply to pay between a basic exemption of $3,500, the slice of annual pay carrying no CPP at all, and an earnings ceiling of $74,600. Each side is capped at $4,230.45 for the year.5 Pay above $74,600 picks up a second contribution called CPP2, at 4% from each side up to $85,000, to a maximum of $416 each.6 CPP also has age limits, so not every employee has all three deductions taken. None comes off before the month after the employee turns 18, and none from the month they turn 70. An employee aged 65 to 69 who already draws a CPP or QPP pension can stop it with Form CPT30.

EI for 2026 is 1.63% of the employee’s pay, up to $68,900 of pay in the year. Your corporation pays 1.4 times the premium you deducted, so $20 of EI off a cheque means it adds $28, which is 2.28% of the same pay to a maximum of $1,572.30 for the year.7

On a $60,000 salary in 2026, anywhere outside Quebec, your corporation’s own share is $3,361.75 of CPP and $1,369.20 of EI. Added up that’s $4,730.95, or 7.88% on top of the salary, and CPP2 never enters it because $60,000 sits below $74,600.8

Payroll isn’t the whole cost. Two more employer costs are provincial rather than federal: workers’ compensation premiums, an insurance charge per $100 of payroll that a provincial board sets by what your business does, and vacation pay, a minimum percentage of wages set by employment standards law.

In Ontario the board is the Workplace Safety and Insurance Board (WSIB), and coverage is mandatory for most industries (construction, restaurants, sales and services, agriculture, manufacturing and trucking among them). Provide your business information within 10 calendar days after the first worker starts,1 then complete registration by the last day of the following month.9 What you then pay is set by the rate class your business falls into rather than by any average, so look your own class up before you budget for it.

In British Columbia every employer is legally required to have WorkSafeBC coverage unless the board’s rules exempt them, so make registering part of the hire itself.1

In Alberta most employers are required by law to carry coverage, and an employer in a mandatory industry must open an account with the Workers' Compensation Board - Alberta (WCB-Alberta) within 15 days of hiring their first worker.1

In Saskatchewan workers’ compensation is a mandatory insurance system for most industries, and the Saskatchewan Workers' Compensation Board (WCB) expects your registration within 30 days of beginning work or hiring workers in the province. Registering late can cost fines, full injury costs and up to three years of retroactive premiums.1

In Manitoba an employer in a mandatory industry must register with the Workers Compensation Board of Manitoba, and the mandatory list runs from agriculture and manufacturing through construction, transportation, retail and services. Registration is free, online or by phone, and the board publishes no day-count for it, so treat it as part of the hire itself.1

In New Brunswick coverage through WorkSafeNB becomes mandatory once you usually employ three or more workers, in essentially all industries, and registration is due within 15 days of workers beginning their employment.1 Register late and the board assesses you retroactively for the whole period registration was required.

In Nova Scotia registration with the Workers' Compensation Board of Nova Scotia is due within 10 days of having three or more workers at the same time in a mandatory industry. The three-worker count includes officers and directors active in the business, even unpaid ones, and voluntary coverage is available below that threshold.1

In Prince Edward Island every employer with one or more workers must register with the Workers Compensation Board of PEI before operations start, unless the industry is one the Workers Compensation Act excludes, and the registration then renews every year.1

In Newfoundland and Labrador every employer doing business in the province must register with WorkplaceNL (Workplace Health, Safety and Compensation Commission), whether the work is full-time, part-time or casual, and the board asks for a certified statement of your payroll within 30 days of becoming an employer.1

Vacation pay follows the same provincial pattern, with a minimum percentage of wages that steps up as an employee’s years of service accumulate.

In Ontario most employees are owed vacation pay of at least 4% of gross wages, rising to 6% once they reach five years of employment.10

In British Columbia vacation pay is at least 4% of all wages earned in the previous year, rising to at least 6% after five years of employment, and someone employed for five calendar days or less isn’t entitled to it.10

In Alberta the minimum is 4% of wages for the first four years of employment, rising to 6% at five years, with some occupations (e.g. real estate salespeople and commissioned insurance agents) exempt.10

In Saskatchewan the minimum is higher than the 4% most provinces set: vacation pay starts at 3/52 of wages (about 5.77%), matching three weeks of vacation, and rises to 4/52 (about 7.69%) after ten completed years.10

In Manitoba the minimum is 4% of gross wages for the first four years of employment, rising to 6% after five consecutive years with the same employer.10

In New Brunswick the minimum is 4% of gross wages until eight years of service, when it rises to 6%.10

In Nova Scotia the minimum is 4% of gross wages, rising to 6% at the start of an employee’s eighth year of service.10

In Prince Edward Island the minimum is 4% of wages plus the value of any employer-provided meals or lodging, rising to 6% at five years, under the new Employment Standards Act in force since June 30, 2026.10

In Newfoundland and Labrador the minimum is 4% of total wages, and it rises to 6% only once an employee completes 15 years of continuous employment with you.10

The remittance calendar

Remitting means paying the CRA what you held back from the employee, plus your corporation’s own CPP and EI on the same wages. You don’t choose how often you do it, because the CRA assigns your frequency and states it on your statement of account. A brand new employer lands on quarterly remitting automatically, on two conditions. Everything you send in a month, meaning the employee’s income tax, CPP and EI plus your corporation’s share, has to come to under $1,000, and nothing on payroll or GST/HST can have been filed or paid late in the last 12 months. Quarterly means four payments a year, due April 15, July 15, October 15 and January 15 for the three months just ended. Once the monthly total reaches $1,000 or that clean record breaks, you become a regular remitter, due by the 15th of the month after the month you paid the wages. Where the 15th lands on a weekend or a public holiday, the next business day is on time.11

Quarterly parks three months of your employees’ deducted pay, which was never your corporation’s money to spend, in the account you spend from. You’re allowed to pay more often than the CRA requires, and we’d do that rather than sit on quarterly, unless the deductions already go into a separate account nobody draws on.

The date matters more than the arithmetic because of the shape of the penalty. Remitting late costs 3% of the amount over $500 at one to three days late, 5% at four or five days, 7% at six or seven days, and 10% past a week. A knowing or grossly negligent repeat in the same year costs 20%, and the $500 floor goes with it.12 Interest runs on top of the penalty at the CRA’s prescribed rate, compounded daily. The CRA resets that rate every quarter, and the current one is on our CRA interest rates page.13 As such, settle early who owns the date each month, whether that’s payroll software, a bookkeeper, or you with a standing calendar reminder.

How often this changes

The CPP and EI rates and ceilings reset every January, so whoever runs your pay needs the new figures before the first January pay run. Two other changes would make us re-run the whole answer, and both of them turn EI off:

  • You hire your spouse, child, parent or sibling. Employing a family member usually falls outside EI, so you deduct no EI, your corporation pays no employer EI, and the person can’t claim EI benefits out of that job. The CRA can decide otherwise where the pay and the duties are substantially what an unrelated person would have been given, so ask for a ruling on Form CPT1 before the first pay run.14
  • You pay yourself through the same account while owning more than 40% of the corporation’s voting shares, meaning the shares that carry a vote at shareholder meetings. Your own pay falls outside EI in the same way, so deduct none and pay no employer EI on it, while CPP and income tax carry on as normal.

Closing thoughts

Hiring your first person changes what your business is rather more than the paperwork suggests, and most owners find the payroll mechanics are the easy part once they’re running. What’s harder, and what nobody sends you a form about, is that somebody’s rent now depends on your invoicing.

How we handle it

We open the payroll account, set up the first pay run against the right province and TD1 codes, and make the payment to the CRA on the date so it isn’t yours to remember. Workers’ compensation registration goes in at the same time, and the T4s are filed each February out of the same file as your corporate return. Year-Round Tax Partner covers the CRA filings, meaning the remittances and the annual T4s, and Tax + Accounting adds the pay runs themselves.

Footnotes

  1. Who must register, and by when, is each board’s own rule. For Ontario: Workplace Safety and Insurance Board (WSIB), Do you need to register with us? - WSIB. Verified 2026-08-13.For British Columbia: WorkSafeBC, Who needs coverage? (worksafebc.com). Verified 2026-08-13.For Alberta: Workers' Compensation Board - Alberta (WCB-Alberta), Worker coverage - WCB-Alberta. Verified 2026-08-13.For Saskatchewan: Saskatchewan Workers' Compensation Board, New business registration - Saskatchewan Workers' Compensation Board. Verified 2026-08-13.For Manitoba: Workers Compensation Board of Manitoba, Register a business for WCB coverage - Workers Compensation Board of Manitoba. Verified 2026-08-13.For New Brunswick: WorkSafeNB, Employer Registration Policy 23-100. Verified 2026-08-13.For Nova Scotia: Workers' Compensation Board of Nova Scotia, Do You Need WCB Coverage for Your Business? | WCB Nova Scotia. Verified 2026-08-13.For Prince Edward Island: Workers Compensation Board of PEI, Employer Registration - Workers Compensation Board of PEI (Registration page and Employer Registration FAQ, December 2025). Verified 2026-08-13.For Newfoundland and Labrador: WorkplaceNL, with the Workplace Health, Safety and Compensation Act, 2022, SNL 2022 c W-11.1, Annual Assessment – WorkplaceNL, Register My Business – WorkplaceNL, and Workplace Health, Safety and Compensation Act, 2022 s. 123. Verified 2026-08-13. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9 ↩10

  2. Canada Revenue Agency, guide RC4120 and “When to file information returns”, “Distribute slips” and “How to file”, verified 2026-08-10. The deadline is the last day of February, moving to the next business day where it falls on a Saturday, Sunday or public holiday recognized by the CRA. The late-filing penalty has a $100 floor for a small number of slips, and failing to give employees their copies costs $25 per day per slip. Electronic filing is mandatory above five slips of one type. ↩

  3. Canada Revenue Agency, “Determine if you need to register” for a payroll program account, verified 2026-08-10. The page sets registration at the first remittance due date, and works the March 11 hiring example through to an April 15 first remittance. ↩

  4. Canada Revenue Agency, “Social insurance number”, “Filing Form TD1” and the Payroll Deductions Online Calculator, verified 2026-08-10. The SIN is due within three days of the day the employee starts, and there’s a $100 penalty for not making a reasonable attempt to get it. ↩

  5. Canada Revenue Agency, “CPP contribution rates, maximums and exemptions” and “Starting and stopping CPP deductions”, verified 2026-08-10. For 2026 the rate is 5.95% on each side, the basic exemption $3,500, the earnings ceiling $74,600 and the maximum $4,230.45 each. The exemption is prorated across pay periods rather than used up in January, which is $134.61 across 26 pay periods. Deductions start with the first pay dated in the month after the employee turns 18 and stop with the last pay dated in the month they turn 70, and an employee at least 65 and under 70 who receives a CPP or QPP retirement pension may stop them by filing Form CPT30. ↩

  6. Canada Revenue Agency, “Second additional CPP (CPP2) contribution rates and maximums”, verified 2026-08-10. For 2026 CPP2 applies to earnings between $74,600 and $85,000, at 4% on each side, to a maximum of $416.00 for each of employer and employee. ↩

  7. Canada Revenue Agency, “EI premium rates and maximums”, verified 2026-08-10, with the employer multiplier at Employment Insurance Act section 68. For 2026 outside Quebec, maximum insurable earnings are $68,900, the employee rate 1.63% to a maximum premium of $1,123.07, and the employer maximum $1,572.30 at 1.4 times the employee premium. Both the multiplier and that maximum assume no EI premium reduction, which an employer with a registered short-term disability plan may hold. ↩

  8. Arithmetic from the CRA 2026 tables rather than a published figure, verified 2026-08-10. CPP is $60,000 less the $3,500 exemption at 5.95%, or $3,361.75, and EI is $60,000 at 1.63% times 1.4, or $1,369.20. CPP and EI are federal and identical in every province outside Quebec. Workers’ compensation premiums and vacation pay are excluded from both. The most one employer can pay in CPP, CPP2 and EI for one employee in 2026 is $6,218.75, and an employee who also worked elsewhere in the year has each employer contributing up to its own maximum. ↩

  9. Workplace Safety and Insurance Board (Ontario), “Register with us” and Operational Policy Manual 14-02-02 “Registration”, verified 2026-08-10. Coverage is mandatory for the industries listed in Schedules 1 and 2 of the Workplace Safety and Insurance Act, and other businesses may apply for optional coverage. A mandatorily covered employer gives the WSIB information about its operations within 10 calendar days of the first worker’s start and completes registration by the final day of the month following the month that worker started. Premium rates are set by rate class, so no employer pays the board’s published all-industry average. The information and completion deadlines are separate, as confirmed in WSIB Registration policy 14-02-02, checked 2026-09-25. ↩

  10. Each percentage is the employment-standards minimum for the province, and a contract can improve on it but not undercut it. For Ontario: Ontario Ministry of Labour, Immigration, Training and Skills Development, Your guide to the Employment Standards Act: Vacation. Verified 2026-08-13.For British Columbia: Province of British Columbia (Employment Standards Branch), Annual vacation – Province of British Columbia (Employment Standards). Verified 2026-08-13.For Alberta: Government of Alberta - Employment Standards (Employment Standards Code), Vacations and vacation pay - Alberta employment standards. Verified 2026-08-13.For Saskatchewan: The Saskatchewan Employment Act, c S-15.1, King's Printer consolidation, The Saskatchewan Employment Act, ss. 2-24 (annual vacation) and 2-27 (vacation pay). Verified 2026-08-13.For Manitoba: Manitoba Labour and Immigration - Employment Standards, Vacations and Vacation Pay fact sheet - Manitoba Employment Standards. Verified 2026-08-13.For New Brunswick: Government of New Brunswick (Employment Standards, Department of Post-Secondary Education, Training and Labour), Paid public holidays, vacation time and pay - gnb.ca. Verified 2026-08-13.For Nova Scotia: Nova Scotia Labour, Skills and Immigration - Labour Standards Division, Vacation Time and Vacation Pay | novascotia.ca. Verified 2026-08-13.For Prince Edward Island: Employment Standards Act, Chapter E-6.3, ss. 29-30 (official consolidation current to June 30, 2026), Employment Standards Act (PEI), Chapter E-6.3. Verified 2026-08-13. A new Employment Standards Act (2024, c. 66, consolidated as Cap. E-6.3) came into force June 30, 2026, repealing the former Employment Standards Act (Cap. E-6.2, repealed by 2024 c.66 s.105). The 6% tier now vests at five years of continuous employment. Datasets built on the former Act's tiers should be re-checked against the new Act.For Newfoundland and Labrador: Labour Standards Act, RSNL 1990 c L-2, s. 8(1) and s. 8(1.1), Labour Standards Act (consolidated), House of Assembly of Newfoundland and Labrador. Verified 2026-08-13. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9

  11. Canada Revenue Agency, “How and when to remit (pay) source deductions” and “Remitter types and due dates”, verified 2026-08-10. A new employer with a monthly withholding amount under $1,000 and a perfect payroll and GST/HST compliance record over the preceding 12 months is a quarterly remitter without applying, and the CRA states the frequency it assigned on the statement of account. The quarterly dates are April 15, July 15, October 15 and January 15, and the regular-remitter date is the 15th of the following month. A due date falling on a Saturday, Sunday or public holiday recognized by the CRA moves to the next business day. Remitting more often than required is permitted and doesn’t change the assigned remitter type. ↩

  12. Income Tax Act paragraphs 227(9)(a) and 227(9)(b) and subsection 227(9.1), verified 2026-08-10. The tiers are 3% at three days or less, 5% at more than three and up to five days, 7% at more than five and up to seven days, and 10% beyond the seventh day, with 20% where a penalty under the subsection was already payable in the year and the failure was made knowingly or in circumstances amounting to gross negligence. Absent that conduct, the penalty applies only to the amount by which the total required to be remitted on the date exceeds $500. ↩

  13. Canada Revenue Agency, “Prescribed interest rates” (https://www.canada.ca/en/revenue-agency/services/tax/prescribed-interest-rates.html), the index of the CRA’s quarterly rate pages. The rate charged on overdue taxes, CPP contributions and EI premiums is reset every calendar quarter under section 4301 of the Income Tax Regulations and compounds daily under subsection 248(11) of the Income Tax Act. The figure is owned by our dataset and stated for every published quarter, each with its CRA page as the source, on our CRA interest rates page, which also works out the charge on an amount over a number of days, and this guide states no rate of its own. Verified 2026-09-06. ↩

  14. Employment Insurance Act paragraphs 5(2)(b), 5(2)(i) and 5(3)(b), verified 2026-08-10. A person controlling more than 40% of a corporation’s voting shares is excluded from insurable employment, as is employment between persons not dealing at arm’s length, the latter unless the Minister is satisfied under paragraph 5(3)(b) that a substantially similar contract of employment would have been made between arm’s-length parties. Form CPT1 is the request for a CRA ruling. ↩

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