Bob Gauvreau walks through hiring your first employees: register with the IRS or CRA for an employer ID, set up withholdings for income tax and benefits, choose your pay frequency, and pick a payroll tool like QuickBooks or outsource to ADP or Ceridian. Missing remittance deadlines carries real penalties.
Chapters
All right, let's talk about your business and hiring employees and setting up a payroll system because it's very different than just operating as a sole proprietor. Once we start bringing in employees, a few things have to be put in place. The very first thing, you know, again, no matter where you are in North America, you need to be registered to hire employees. So what does that mean? Well, you need to contact the IRS or the Canada Revenue Agency and, and make sure that you have a unique employer identification number that's in the United States. In Canada, we want to have a payroll account registered to our business number. This allows us to collect and remit withholdings from employees, actual regular payroll as well. So that brings a whole other question. So once we get that registered and we have the ability to withhold taxes from an employee's payroll, then we have to understand what the payroll obligations are, what the frequency of that payroll is. Some people do monthly, some people do bi, monthly, biweekly, weekly. Typically that's about as frequent as possible. But sometimes people do quarterly, annually. You know, it's a one time lump sum payment. We need to be aware of this. Right. And then there's different categories of employees. A lot of times they're employees that are just working with zero risk. They get a salary or a rate per hour that they get paid off of. And there's withholdings, tax held for this. You know, Canada pension plan and Canada employment insurance withholdings, federal tax. In the US we've got tax withholdings, we've got employment insurance as well. We've got other health taxes as well. So there's different withholdings that come off every individual employee's pay. Us as an employer, we're collecting those withholdings on behalf of the government and then we're remitting them. So we then have to understand our remitting requirements. How often do we have to pay this? Typically it's monthly. In Canada you're the 15th of the month. Typically when you only have one employee. In the US it's monthly as well. But as you continue to grow your team, that frequency based on the amount that you're paying your employees, that frequency frequency will increase. So we have to be paying attention to this because there's penalties for not remitting and there's interest for not remitting as well. So we've got a few things right. We've got getting access to our number, making sure we're registered. That gives us the opportunity to withhold taxes from our employees, which is a requirement. Right. It's not that we just want to withhold from employees, it's that we're required by the government to do so. We then have to understand the frequency of pay, whether or not they're on salary or hourly. What the frequency is, is it weekly, biweekly, bi, monthly, monthly, quarterly? And then we have to understand what the remitting requirements are related to those payments. So when we're withholding, when do we have to pay that? So then we need to understand how we're actually going to calculate these things. So typically, someone would set up a QuickBooks Online account, get access to maybe a payroll component of this, or you completely outsource your payroll to a company like ours to do payroll, or a Ceridian or adp, which is a third party. The banks also do direct deposit for employees. Right. So someone's calculating these and remitting these. These payments to employees and to the government on your behalf. Again, I would highly recommend a QuickBooks Online. QuickBooks Online has a payroll calculator within there if you are feeling comfortable that you can handle this. That is a really great tool to be able to utilize it. So there's a lot going on when we continue to bring on new employees, but it's very valuable if we're looking to scale our business and continue to build our team and build something that's bigger than us.
