{"id":8393,"date":"2021-11-04T19:23:36","date_gmt":"2021-11-04T19:23:36","guid":{"rendered":"https:\/\/ownrblog-preprod.go-vip.net\/?p=8393"},"modified":"2023-12-07T13:37:45","modified_gmt":"2023-12-07T13:37:45","slug":"what-is-payroll","status":"publish","type":"post","link":"https:\/\/www.ownr.co\/blog\/what-is-payroll\/","title":{"rendered":"What Is Payroll and How Does It Work?"},"content":{"rendered":"

As your business starts to grow, you might stretch yourself thin trying to accomplish everything that needs to get done in a day. There comes a point in a business where you, as the business owner, need to grow their business. But, without extra hands on deck, your business is likely to plateau.\u00a0<\/span><\/p>\n

You need to <\/span>hire an employee<\/span><\/a> or two. This is a big milestone for entrepreneurs. There\u2019s not only the realization that your business really is flourishing, but yet another learning curve to tackle: payroll.\u00a0<\/span><\/p>\n

This guide will take you through all the ins and outs of payroll and the best payroll systems for small businesses.\u00a0<\/span><\/p>\n

How does payroll work?<\/span><\/h2>\n

Payroll is a regular process by which businesses pay their employees an hourly or yearly salary for work performed. Depending on the employee type and pay structure, the employer will deduct certain amounts from the employee\u2019s pay cheque for benefits such as Canadian Pension Plan (CPP), Employment Insurance (EI), group benefits, and so on.\u00a0<\/span><\/p>\n

We\u2019ll discuss the steps to take, from pre-payroll to post-payroll, below.<\/span><\/p>\n

What is the payroll process?<\/span><\/h2>\n

The payroll process isn\u2019t just cutting cheques to your employees. It starts even before you hire your first employee.\u00a0<\/span><\/p>\n

Pre-payroll activities<\/span><\/h3>\n

In order to start your payroll, you\u2019ll need to complete the following:<\/span><\/p>\n

Register your business<\/span><\/h4>\n

Even if you have no intentions of hiring an employee, registering your business either as a <\/span>sole proprietorship<\/span><\/a>, partnership, or <\/span>corporation<\/span><\/a> is always a good idea. It can open you up to all sorts of opportunities, including credits, loans, grants, and possible investors. It also helps to legitimize your business in the eyes of your suppliers and clients.\u00a0<\/span><\/p>\n

Open a payroll account with Canada Revenue Agency (CRA)<\/span><\/h4>\n

In order to remit the deductions you\u2019ve made on your employees\u2019 pay cheques, you need to open a <\/span>payroll account with CRA<\/span><\/a>. This requires you to <\/span>register your business<\/span><\/a> and have a business number (BN). If you\u2019re already <\/span>registered for GST\/HST<\/span><\/a>, this is the same thing.\u00a0<\/span><\/p>\n

Actual payroll process<\/span><\/h3>\n

Here are the steps involved in the actual payroll process for businesses:\u00a0<\/span><\/p>\n

Collect the required information from your employees<\/span><\/h4>\n

Collect all pertinent information needed to complete payroll as part of your hiring process. This includes:<\/span><\/p>\n