Hiring Your First Employee in Ontario: A Financial Checklist

Before You Post the Job

Before you hire, make sure you've done the financial analysis. Can you afford an employee? Calculate the true cost of employment — not just the salary, but CPP contributions (employer portion), EI premiums (1.4x the employee rate), WSIB premiums, vacation pay (minimum 4%), and any benefits you plan to offer.

A $50,000 salary typically costs an employer $55,000 to $60,000 all-in when you include mandatory payroll costs. Build this into your financial projections before committing.

Register for a Payroll Account

You need a CRA payroll program account (Business Number with RP suffix) before you can process payroll. Register online through My Business Account or by calling the CRA. This is separate from your corporate income tax account.

Also register with the Workplace Safety and Insurance Board (WSIB) if your industry requires it. Most Ontario businesses with employees must register within 10 days of hiring.

Collect Required Employee Documents

Before the first pay period, collect:

• TD1 Federal Personal Tax Credits Return
• TD1ON Ontario Personal Tax Credits Return
• Social Insurance Number (SIN)
• Direct deposit banking information
• Completed employment contract (strongly recommended)

Set Up Payroll Processing

Choose a payroll method: manual calculation using CRA payroll tables, payroll software (Wagepoint, Payworks, ADP), or outsourced payroll through your accountant. For most small businesses, payroll software is the best balance of cost and accuracy.

Set up your payroll schedule — weekly, bi-weekly, or semi-monthly. Bi-weekly (every two weeks, 26 pay periods per year) is the most common in Canada. Ensure your payroll software is configured for Ontario and updated with current CPP, EI, and tax rates.

Understand Your Remittance Obligations

As a new employer, you'll likely be a regular remitter — payroll deductions (CPP, EI, income tax) must be remitted to the CRA by the 15th of the month following the pay period.

Set up a separate bank account or at minimum a dedicated line item in your accounting software to track payroll remittances. These are trust funds — they belong to the CRA, not your business.

Ontario Employment Standards Act Obligations

Ontario's Employment Standards Act sets minimum standards for employment. Key requirements include:

• Minimum wage compliance (check the current Ontario minimum wage)
• Vacation pay of at least 4% of gross wages (6% after 5 years)
• Public holiday pay for nine Ontario statutory holidays
• Overtime pay at 1.5x regular rate after 44 hours per week
• Written notice or pay in lieu upon termination
• Providing a written employment contract that meets ESA minimums

Budget for Year-End Obligations

At year-end, you'll need to issue T4 slips to your employee and file a T4 Summary with the CRA by the last day of February. You'll also need to issue a Record of Employment (ROE) if the employee leaves or has an interruption of earnings.

Build these administrative tasks into your annual calendar. Missing T4 deadlines results in penalties, and late ROEs can affect your employee's EI claim.