Running payroll in Canada involves more than just paying employees. Employers must calculate deductions, comply with federal and provincial rules, and remit amounts on time to avoid penalties.

This guide walks you through the full payroll process in Canada, step by step.

What is payroll in Canada?

Payroll in Canada is the process of paying employees while calculating and remitting mandatory deductions such as:

• Income tax
• Canada Pension Plan (CPP)
• Employment Insurance (EI)

Employers are responsible for both deducting and remitting these amounts to the government.

Step 1 — Register for a payroll account

Before running payroll, you must register with the CRA.

You’ll need:

• A Business Number (BN)
• A payroll program account (RP)

You can register:

• Online via CRA
• Through your accountant
• Automatically via some payroll platforms

Step 2 — Collect employee information

For each employee, you must collect:

• Full legal name and address
• Social Insurance Number (SIN)
• Federal and provincial TD1 forms
• Bank details (for direct deposit)

These forms determine how much tax to deduct.

Step 3 — Choose a pay schedule

You must define how often employees are paid:

• Weekly
• Bi-weekly
• Semi-monthly
• Monthly

Your choice impacts:

• Deduction calculations
• Cash flow
• Compliance timing

Step 4 — Calculate gross pay

Gross pay is the total earnings before deductions.

Examples include:

• Salary
• Hourly wages
• Overtime
• Bonuses

Step 5 — Calculate payroll deductions

You must calculate:

Mandatory deductions:

• Income tax (federal + provincial)
• CPP contributions
• EI contributions

Additional deductions (if applicable):

• Benefits
• Pension plans
• Union dues

Step 6 — Run payroll and pay employees

Once calculations are complete:

• Generate pay statements (pay stubs)
• Pay employees via:
  • Direct deposit (recommended)
  • Manual payment (cheque or transfer)

Step 7 — Remit deductions to the CRA

You must send deducted amounts to the CRA.

Remittance frequency depends on your business size:

• Monthly
• Quarterly
• Accelerated (large employers)

Late remittances can result in penalties and interest.

Step 8 — File year-end reports

At the end of the year, you must:

• Issue T4 slips to employees
• File a T4 Summary with the CRA

In Québec, you must also:

• Issue RL-1 slips

Common payroll mistakes to avoid

Many businesses struggle with payroll compliance. Here are the most common mistakes:

• Incorrect tax calculations
• Missing remittance deadlines
• Misclassifying employees vs contractors
• Not keeping proper payroll records

Manual vs automated payroll

Manual payroll

• You calculate everything yourself
• Higher risk of errors
• More time-consuming

Automated payroll

• Software calculates deductions automatically
• Handles remittances and reporting
• Reduces compliance risk

How BemaPay helps simplify payroll

BemaPay is designed for Canadian businesses that want a simpler way to manage payroll and compliance.

With BemaPay, you can:

• Run payroll in minutes
• Automatically calculate deductions
• Stay compliant across Canada and Québec
• Choose manual or fully automated payroll

Conclusion

Running payroll in Canada requires careful attention to deductions, deadlines, and reporting.

While it’s possible to manage payroll manually, most businesses benefit from using a payroll platform to reduce errors and save time.