(NC) Going from a solo-preneur to a team of two is a milestone for any small business, and while onboarding your first new hire is a small jump in numbers, it is a big leap in terms of business operations – there are many legal and regulatory requirements that come with this change, particularly when it comes to payroll.
“Business owners are often shocked by the many legal and regulatory requirements that need to be considered when setting up payroll for a new employee,” says Peter Tzanetakis, president of the National Payroll Institute. “We’ve got some key tips to share.”
Before you begin the payroll process, the Institute suggests you consider the following:
- Set up for success: Employers must determine each worker’s status. Incorrectly assessing a worker’s status can lead to costly repercussions or penalties. Creating a clear employment contract, outlining salary rate, overtime rate, commission, bonus, stocks, vacation, statutory holidays and personal days is imperative from the get-go.
- Seamless start date: Once you hire your first employee, as an employer you must validate the employee’s Social Insurance Number within three days of the start date. You will also need the employee to complete various forms like the federal TD1 and other provincial forms to determine income tax withholdings.
- Ongoing delivery: Use a void cheque to establish direct deposit, and ensure employee has access to vital payroll information. You may need employee consent on the preferred methods to deliver pay statements and/or tax forms.
The collaboration and innovative ideas that come with new employees is exciting for small businesses, but take the time to understand the rules. Ensuring you have everything to successfully pay new employees and fulfill updated tax obligations will allow you to focus on growing your business.
Learn more about how to build business health through strong payroll in the National Payroll Institute’s new e-book at payroll.ca/payrollcheckup.
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