What do I need to do when I hire my first employee?
Open a payroll account with CRA, collect TD1 forms, withhold and remit source deductions on schedule, and register for workplace coverage — before the first payday.
The first hire turns you into a payroll operator overnight. The steps, in order:
Before the first payday
Open a payroll program account (an RP account on your CRA business number). Have the employee complete federal and provincial TD1 forms so you withhold the right tax. In Ontario, register with WSIB for workplace coverage — most employers must, within days of hiring.
Every payday after that
Withhold income tax, CPP, and EI from each cheque, and add the employer’s share of CPP and EI on top — the true cost of an employee is meaningfully more than the wage. Remit the withheld amounts to CRA on your remitter schedule; for most new employers that is the 15th of the month after payday.
At year-end and departure
T4 slips are due to employees and CRA by the last day of February. When someone leaves, a Record of Employment goes to Service Canada within days — it is how they claim EI, and late ROEs generate angry calls.
This is general information, not tax advice for your situation. Book a call and a Canadian accountant will give you the answer for your business.
Common questions
How much does an employee really cost beyond wages?
Budget for the employer's share of CPP and EI on top of gross pay, plus WSIB premiums in Ontario and any Employer Health Tax once payroll is large enough. A rough planning cushion above the wage is prudent; your accountant can size it for your case.
Can I just pay my first hire as a contractor to keep it simple?
Only if they genuinely are one. CRA looks at control, tools, and financial risk, not the label. Misclassifying an employee as a contractor can make you liable for the deductions you never withheld, plus penalties.