When Should You Register for Payroll?

If you’re starting a business in Canada and plan to hire employees, one of the most important steps is knowing when to register for payroll with the Canada Revenue Agency (CRA). Failing to register on time can lead to compliance issues and unnecessary penalties.

This guide explains when you need to register for payroll, the CRA rules, and what steps to take to get started.

What Is Payroll Registration?

Payroll registration means setting up a CRA payroll account so you can deduct and remit mandatory contributions from your employees’ pay. This includes:

• Canada Pension Plan (CPP) contributions

• Employment Insurance (EI) premiums

• Federal and provincial income tax deductions

Employers are legally required to collect and submit these amounts to the CRA on behalf of their employees.

When Do You Need to Register for Payroll?

You must register for payroll before your first remittance due date. In practical terms, you should register as soon as you:

1. Hire Your First Employee

The moment you hire an employee and agree to pay them wages, salaries, or other taxable benefits, you need a payroll account.

2. Pay Yourself as a Director or Owner

If you pay yourself a salary from your corporation, you are considered an employee. That means you need payroll registration to remit your own CPP and tax deductions.

3. Provide Taxable Benefits

Even if you don’t have regular employees, offering taxable benefits (like housing allowance, car allowance, or health benefits) requires payroll registration.

4. Pay Non-Residents for Services in Canada

If you pay non-residents for work done in Canada, you must register to remit the required withholdings.

How to Register for Payroll with the CRA

1. Online: Use the CRA’s Business Registration Online portal.

2. By Phone: Call the CRA business enquiries line.

3. By Mail or Fax: Submit Form RC1 (Request for a Business Number).

Once registered, you’ll receive a Business Number (BN) with a payroll account (RP) extension.

What Happens If You Don’t Register on Time?

Failing to register can result in:

• Penalties for late or missing remittances

• Interest charges on unpaid amounts

• Increased risk of a CRA payroll audit

It’s always better to register early and stay compliant from day one.

Final Thoughts

Knowing when to register for payroll in Canada is crucial for business owners. The rule of thumb: register as soon as you hire your first employee, pay yourself a salary, or offer taxable benefits. Doing so ensures compliance with CRA requirements and helps you avoid costly penalties.

👉 Need help setting up payroll? At Tikitax, we help Canadian businesses register with the CRA, manage payroll deductions, and stay compliant—so you can focus on growing your business. Contact us today to get started.