Hiring Your First Employee: What You Need in Place

Taking on your first employee changes your obligations immediately. None of the requirements below are difficult, but all of them start with the first pay cheque rather than at year-end.

Open a payroll account

You need a payroll program account with the CRA, added to your existing business number. Do this before the first pay run, because remittance obligations begin as soon as you pay someone.

Have the employee complete TD1 forms

New employees complete a federal and a provincial TD1. These determine how much income tax to withhold. Keep them on file. You do not send them to the CRA, but you must be able to produce them.

Withhold and remit

From every pay cheque you withhold income tax, CPP contributions, and EI premiums. The corporation adds its own employer share of CPP and EI on top. Those amounts are held in trust and are not company money at any point.

Most new employers are regular remitters, with amounts due by the 15th of the month after the pay period. The CRA assigns your remitter type and will tell you if it changes. Late payroll remittances attract some of the harshest penalties in the tax system, so this is the deadline to automate first.

Register for workers’ compensation

Workers’ compensation is provincial, and most employers must register once they have workers. Registration is separate from anything you do with the CRA and brings its own reporting. In Alberta, the WCB annual return is due at the end of February, reporting your actual and estimated payroll; other provinces run their own boards and deadlines.

Know the employment standards rules

Employment standards are set provincially and cover minimum entitlements including vacation pay, general holiday pay, overtime, and notice on termination. They apply regardless of what an employment agreement says, they differ from province to province, and they are a frequent source of unexpected cost for new employers.

Be careful with contractor arrangements

Calling someone a contractor does not make them one. The CRA looks at the substance of the relationship: control over the work, who provides the tools, whether the worker can profit or lose, and how integrated they are into your business. A worker reclassified as an employee leaves the employer owing the deductions that should have been withheld, plus penalties and interest. If the arrangement is genuinely borderline, get advice before it starts rather than afterwards.

At year-end

T4 slips and the T4 Summary are due by the last day of February. You will also issue a Record of Employment whenever someone leaves or has an interruption in earnings.

If you would rather not run this yourself, our payroll service covers the pay runs, remittances, T4s, and ROEs, and we handle WCB filings alongside it. Talk to us before your first hire.