How to Run Payroll in PayCub: A Step-by-Step Walkthrough

PayCub is designed to get you from setup to your first pay run in under an hour. This guide walks through every step: company setup, adding employees (including the settings most people miss), and running payroll each pay period. Once you've done it once, subsequent runs take under five minutes.

Step 1: Company setup

Before you can run payroll, PayCub needs to know a few things about your business. In the Company Settings section, you'll enter:

• Legal business name: used on pay stubs and T4 slips
• Business Number (BN): your CRA 9-digit business number, required for T4 filing
• Province of employment: determines which provincial tax tables are applied
• Pay frequency: weekly, biweekly, semi-monthly, or monthly. This affects how deductions are calculated, since the CRA formulas are frequency-dependent
• Remittance frequency: monthly (most small businesses), quarterly, or accelerated. This sets the due date shown on your remittance summary

If you manage multiple companies, each gets its own company profile under the same PayCub account. You switch between them from the top of the dashboard. You only pay for active employees across your companies, not per company.

Step 2: Adding employees

Go to the Employees section and click Add Employee. You'll work through a short setup form covering the basics, pay type, vacation settings, and TD1 options. Take your time on this step: most of these settings carry forward to every future pay run, so getting them right upfront saves a lot of adjustments later.

Basic employee information

• Legal name: as it appears on their SIN card, used on pay stubs and T4s
• SIN (Social Insurance Number): required for T4 slip generation
• Date of birth: relevant for CPP exemption rules (employees 18 and under, or 70 and over, are exempt from CPP)
• Email address: used to deliver pay stubs electronically
• Province of employment: can differ from your company's province if an employee works remotely from another province

Pay type

PayCub supports three pay types:

• Hourly: you enter hours each pay run. PayCub calculates gross pay based on hours worked at the set hourly rate
• Salary: a fixed annual salary is divided by the number of pay periods in the year. No hours entry required each run
• Piecework: you enter the number of units completed and the rate per unit. PayCub calculates gross pay accordingly. This pay type is relatively rare in Canadian payroll software and is one of PayCub's standout features for trades, agriculture, and manufacturing businesses

Step 3: Vacation pay settings

This is one of the most important and most commonly overlooked settings. PayCub supports two methods of handling vacation pay, and you choose per employee based on your arrangement with them.

Option 1: Vacation pay paid out each period

With this option, vacation pay is calculated as a percentage of the employee's gross wages each pay period and added directly to their pay. The employee receives their vacation pay continuously rather than as a lump sum when they take time off.

This is the most common approach for hourly employees, especially in industries with irregular hours. The standard vacation pay rate in most provinces is 4% for employees with fewer than 5 years of service, and 6% after 5 years, though this varies by province.

In PayCub, select "Pay each period" and enter the applicable percentage. The vacation amount is automatically calculated and added to gross pay on every run, and is shown as a separate line on the pay stub.

Option 2: Vacation pay accrued

With the accrual method, vacation pay accumulates in a running balance as a percentage of earnings but is not paid out until the employee takes a vacation. The accrued amount is tracked in PayCub and you pay it out as a separate line item when the employee actually takes time off.

This method is more common for salaried employees and is useful when employees bank vacation time and take it as actual days off rather than receiving a small top-up each pay period.

In PayCub, select "Accrue" and enter the percentage. The balance builds up in the employee profile, and you manually trigger the payout when the employee takes their vacation.

Step 4: TD1 and tax credits

The TD1 (Personal Tax Credits Return) is the form employees use to declare the tax credits they're claiming, which determines how much income tax is withheld from their pay. Getting this right is critical. Under-withholding means the employee owes tax at filing; over-withholding means they get a refund but had less take-home pay than they should have.

How TD1 works in PayCub

TD1 amounts are entered on the employee's first pay stub, not during employee setup. When you run payroll for a new employee for the first time, PayCub will prompt you to enter their TD1 claim code before generating the stub. PayCub uses CRA claim codes rather than raw dollar amounts. The default is Claim Code 1, which represents the basic personal amount that every employee is entitled to. Most employees use Code 1.

If an employee has additional credits (spouse or common-law partner amount, eligible dependant, disability, tuition transferred, etc.), a higher claim code is selected to reflect the increased total claim. Employees with no credits at all, such as a second job where they are not claiming the basic amount, would use Code 0.

PayCub uses the TD1 claim amount to determine the employee's tax withholding. A higher claim amount means less tax withheld, because the employee has credits that reduce their effective tax rate.

Federal vs. provincial TD1

There are two TD1 forms: one federal (TD1) and one provincial (TD1 for your province). Both claim amounts are entered in PayCub. For most employees, the provincial basic personal amount follows a similar structure to the federal form but with province-specific amounts.

TD1 carries forward automatically

Once you've set a new employee's TD1 on their first pay run, it carries over to every subsequent pay run automatically. You only need to update it if the employee submits a new TD1: for example, after a life change like a new dependent or a change in their spouse's employment status. Employees are responsible for notifying you when their TD1 changes.

What if an employee doesn't give you a TD1?

If an employee does not give you a completed TD1, CRA guidance says to withhold tax as if they are claiming only the basic personal amount. Enter the basic personal amount for their province and the federal basic personal amount and PayCub will handle the rest.

Step 5: Running payroll

Once your company is configured and employees are set up, running payroll is the fast part. From the dashboard, click Run Payroll and select the pay period.

For hourly and piecework employees

Enter the hours worked (or units completed) for each employee in the current pay period. PayCub calculates gross pay based on the rate you set during employee setup. You can adjust hours for individual employees without affecting their saved rate.

For salaried employees

No hours entry is needed. PayCub automatically uses the salary amount divided by the number of pay periods for the year. The pay run screen shows each salaried employee with their pre-calculated gross pay for the period.

Reviewing deductions

Before confirming the run, PayCub shows you a summary of all calculated deductions for every employee:

• Federal income tax (based on TD1 and pay frequency)
• Provincial income tax (based on province of employment and provincial TD1)
• CPP contributions (employee share: 5.95% of pensionable earnings in 2025, up to the maximum)
• CPP2 (second-tier contributions where applicable)
• EI premiums (employee share: 1.66% in 2025, up to the insurable earnings maximum)
• Vacation pay (added to gross if set to pay each period)

Review the deductions for accuracy. If something looks wrong, you can adjust hours or rates before confirming. Once you click Confirm Payroll, the run is finalized and pay stubs are generated.

Payroll adjustments

If you need to add a one-time amount (a bonus, commission, retroactive pay, or a specific deduction), you can add a payroll adjustment on the run screen before confirming. Adjustments are applied to that pay period only and do not change the employee's base settings.

Step 6: Pay stubs and delivery

Once payroll is confirmed, PayCub generates a professional CRA-compliant pay stub for every employee in the run. Each stub shows:

• Gross pay for the period
• All deductions itemized (federal tax, provincial tax, CPP, EI, vacation pay if applicable)
• Net pay
• Year-to-date totals for gross pay and all deductions
• Pay period and cheque date
• Employee and employer information

Delivering pay stubs

You have three options for getting pay stubs to employees:

• Email: PayCub sends the pay stub directly to the employee's email address as a PDF attachment. You can trigger this immediately when payroll is confirmed, or schedule it to go out on pay day
• Download PDF: download individual or bulk PDFs from the pay run screen to print or share however you prefer
• Scheduled delivery: set pay stubs to go out automatically on a specific date. Useful if you run payroll a few days early but don't want employees to receive their stub before pay day

Step 7: Remittance summary

After each payroll run, PayCub generates a remittance summary showing exactly what you need to send to the CRA. This report is formatted to align with the CRA's PD7A remittance form.

The summary shows:

• Total federal and provincial income tax withheld from all employees
• Total employee CPP contributions
• Total employer CPP contributions (your matching share)
• Total employee EI premiums
• Total employer EI (1.4 times the employee amount)
• Grand total due to the CRA
• Due date based on your remittance frequency

You submit this remittance yourself through My Business Account or at your financial institution. PayCub does not remit on your behalf: the summary gives you the exact amounts so there's no calculation needed on your end.

The remittance summary is available as a PDF from the Reports section at any time.

Step 8: Year-end T4s

If you've run all your payroll through PayCub during the year, your T4s are essentially already built. At year-end, navigate to Reports > T4 and PayCub compiles the full calendar year of pay data into completed T4 slips for every employee.

Key boxes are automatically populated:

• Box 14: total employment income
• Box 16: CPP contributions (employee)
• Box 17: CPP2 contributions
• Box 18: EI premiums
• Box 22: income tax deducted
• Box 24: EI insurable earnings
• Box 26: CPP pensionable earnings

Review each slip, then download individual PDFs to distribute to employees by February 28. The T4 Summary, which you file with the CRA, is also generated automatically from the same data.

For a full breakdown of T4 requirements and how to file, see our T4 slips guide.

Tips for a smooth payroll experience

• Run payroll consistently. Use the same pay period dates each cycle. PayCub tracks YTD totals cumulatively, so inconsistent periods can cause deduction calculation issues near CPP and EI maximums.
• Confirm hours before running. Once a payroll run is confirmed, pay stubs are generated and sent. There is no "undo." If you need to correct a confirmed run, contact PayCub support.
• Update TD1s when employees notify you. Employees are required by the CRA to submit a new TD1 whenever their credits change. When you receive an updated TD1, update the employee record before the next run.
• Track your remittance due dates. Most small businesses remit monthly (the 15th of the month following the payroll period). Missing a remittance date triggers CRA penalties. Your remittance summary shows the due date clearly.
• Use PayCub's reports throughout the year. Don't wait until February to look at your numbers. The payroll history report in PayCub lets you review gross pay, deductions, and net pay by employee and by period at any time.