Hiring your first employee is one of the biggest milestones for a small business. It is also when payroll compliance becomes your responsibility. Setting things up correctly from the start saves a lot of painful corrections later.
Before you run your first payroll
There are a few things you need in place before you can legally pay an employee.
Get a Payroll Program Account from the CRA
You need a Payroll Program Account (a 15-character account number ending in RP) to remit deductions to the CRA. You register through My Business Account on the CRA website or by calling the CRA business line. This is separate from your GST/HST account. You need this before your first pay date.
Collect a TD1 from your employee
On or before the first pay day, your new employee must complete a TD1 Federal and a TD1 Provincial form. These forms declare the tax credits the employee is claiming, which determines how much income tax you withhold. If the employee does not provide a TD1, withhold tax as if they are claiming only the basic personal amount (Claim Code 1). Keep the completed forms on file. You do not send them to the CRA.
Confirm their SIN
You are legally required to collect the employee's Social Insurance Number. You need it for T4 filing at year-end. Employees are required to provide it within three days of starting work.
What you deduct from every paycheque
On every pay run, you are required to deduct three things from the employee's gross pay and remit them to the CRA:
- Federal and provincial income tax based on the employee's TD1 claim amount and pay frequency
- CPP contributions at 5.95% of pensionable earnings (2026 rate), up to the annual maximum
- EI premiums at 1.64% of insurable earnings (2026 rate), up to the annual maximum
You also contribute the employer share on top of these deductions: your CPP match (equal to the employee amount) and your EI share (1.4 times the employee amount).
Remitting to the CRA
Most new employers are monthly remitters. You remit by the 15th of the month following the pay period. So if you run payroll in January, you remit by February 15. Missing this date triggers CRA penalties, so mark it in your calendar.
PayCub generates a remittance summary after every pay run showing exactly what to remit and when. You submit directly to the CRA through My Business Account or your financial institution.
Setting up in PayCub
If you are using PayCub, setup takes about 15 minutes. Add your company (legal name, BN, province, pay frequency), add the employee (name, SIN, date of birth, province of employment, pay type and rate), and enter their TD1 claim code on the first pay stub. Every subsequent pay run calculates deductions automatically. You review, confirm, and run. Pay stubs are generated instantly and can be emailed directly to your employee.