What Are My Responsibilities?
Employer Responsibilities: Payroll
Getting your business up and running can take a lot of effort and time. It takes energy and planning to set up good accounting and bookkeeping systems at the beginning. But, once things are up and running, it is just a matter of filling information in, monitoring and keeping track of everything.
Hiring staff is similar! There are a number of things you have to set up when you first hire an employee, but once this is done you really just need to keep filling in information and filing things on time. Whether you use a bookkeeper, an accountant or do it yourself as the employer, you need to understand your responsibilities and how the system works.
One of the first things you will have to do when you hire someone is set up a payroll system. Payroll is your system to keep track of your employee’s pay and the deductions that are taken off their pay for taxes and other things. Payroll ensures that both you and your employee has a record of their pay for the Canada Revenue Agency (CRA). The payroll system will take your employee’s pay (what you have agreed to pay) and automatically figures out how much should be taken off for deductions. These deductions include things like income tax, Canada Pension Plan (CPP) and Employment Insurance (EI) that are paid directly to CRA. The money that’s left over after deductions is what goes straight into the bank account of your employee.
Although CRA can seem a little intimidating, they are actually pretty good to work with. CRA tries to make things as easy as possible for small businesses. For example, they have a “payroll deduction calculator” that can help you determine what the deductions should be for each of your employees. You can find the payroll deduction calculation here: http://www.cra-arc.gc.ca/esrvc-srvce/tx/bsnss/pdoc-eng.html.
Using your payroll system, your business will create a payslip for each employee including their wages, all deductions and their remaining take-home pay. The income tax, EI and CPP amounts make up the main boxes on the payroll slip, but there may be others. The following information is usually included on a payslip:
- Number of hours worked that the employee is being paid for
- Pay period and the wages paid to the employee
- Pension payment (if applicable)
- Other benefits that may be paid to the employee that are taxable
- Premiums on group benefits paid by the employee (for example, health benefit plans)
- Vacation pay
- Commissions paid to the employee (if applicable)
- Provincial or territorial taxes paid
Remember, as soon as you hire someone you become an employer. This means that you are responsible for ensuring that you understand and follow each step involved in the payroll process:
- Register and maintain a payroll deductions account with CRA.
- Keep each employee’s social insurance number (SIN) on file.
- Have each employee complete a TD1 Form: Personal Tax Credits Return. This form determines the amount of tax that should be deduced from your employee’s pay.
- Calculate and deduct CPP contributions, EI premiums and income tax. Keep these deducted amounts in a separate bank account.
- Submit payroll deductions with your share of CPP and EI on time, every time.
- Report employee deductions on a T4 or T4A slip by the end of February each year.
- Complete a Record of Employment (ROE) for each employee when they stop working with you (quit or fired).
- Keep all records and important documents in a safe, secure spot. Where possible, back-up your records onto a computer system outside of your business location.
CRA has a great website that can help answer any questions and you get on the right path for payroll! Check out their New Small Business video series at:
Employer Responsibilities: Workers’ Rights and Workplace Safety
Many business owners begin their businesses with a small number of employees, sometimes just the owner and a relative or friend helping out. However many employees you have, there are a number of things you are responsible for and should know about. Knowing these things up front will help you be a better employer and have happier and healthier employees – both good things for your business.
No matter what territory or province your business operates in, there are regulations that set standards for employment and the safety of employees in the workplace. These standards cover a number of important issues, including safety, pay, number of work hours and firing employees.
Ensuring your employees have a safe workplace to work in is a basic obligation of all employers. Nobody wants people to get hurt while they are doing their job. There is some variation in the regulations on workplace safety across Canada, but several standard requirements include:
- Injured employees must be transported quickly to the nearest health facility.
- When someone is injured doing their job, the employer has to fill out a detailed report of what happened. The employee is also required to submit a report describing their version of events.
- Employers are required to follow various codes and standards. In Nunavut for example, employers are required to follow the General Safety Regulations, the Code of Practice on Asbestos Abatement and the Code of Practice of Hazard Assessment among others. Rules about how to properly post notices of possible dangers and working in potentially dangerous situations are included in the Consolidation of Safety Act. You can find the full Safety Act for Nunavut here: http://www.gov.nu.ca/safety-act-consolidation.
It is important to note that employees have the right to refuse to work in dangerous situations. Employers should have clear safety inspections done on a regular basis to identify any potentially dangerous or hazardous areas of work. Every workplace should create a safety plan and choose a safety officer, safety plans can include fire escape plans, First Aid kits, emergency contact information, etc. Employees should always have access to appropriate safety equipment and clothing. It is a good idea to have spot checks done regularly to see how well employees know what to do if there is an injury or an emergency.
Training remains a key part of having a good injury prevention plan in the workplace.
- Make sure your employees are aware of any potentially dangerous aspects of their job.
- Have staff receive First Aid Training.
- Make sure staff are trained in Workplace Hazardous Materials Information System (WHMIS). This is the recommended method of dealing with hazardous materials in the workplace and includes safe storage of materials, how to treat injuries caused by these materials and proper labelling of products.
- Review safety plans and training needs for employees on a regular basis.
Depending on the province or territory, employees that are injured or become sick on the job are able to access a number of services and compensation arrangements. These may include physiotherapy, continued salary payments and ongoing medical care as needed. Injured staff can receive financial help to cover disabilities caused by work injuries, specialized medical care related to the injury, necessary medical equipment and prescriptions. Employees who are unable to work due to workplace injuries can also be compensated for the income they are losing while away from work. Both employers and injured employees are required to submit a claim to the appropriate Worker’s Compensation Board in their province/territory. You can find the right contact for your province or territory here: https://www.ccohs.ca/oshanswers/information/wcb_canada.html.
As your business grows and you hire more employees, you need to make sure that you meet all the responsibilities and expectations of an employer. For more information on the health and safety laws that might apply to you, check the Canadian Centre for Occupational Health and Safety at https://www.ccohs.ca/.
If your business is located in Nunavut or the Northwest Territories, you must register with the Worker’s Safety and Compensation Commission (WSCC). The WSCC provides services to ensure the safety of workplaces across the North. On the website of the WSCC, you can find more information about their services, including reporting a workplace injury or registering for First Aid training. The information is also available in Inuktitut online. You can register with the WSCC here: http://www.wscc.nt.ca/employer-services/register-business.
Your employees are critical to the success of your business. You may think that your business space is safe because you are not doing anything dangerous, but accidents happen all the time. It is always better to be prepared and have a plan, whether your employees are cooking, sewing, driving or sitting all day at a computer. Having a safe workplace must be a priority for all business owners – make sure it is yours.
Insurance for Businesses
Every business has assets (possessions or property) and risks related to the operation of the business. Whether it is the truck you use to deliver goods, computers you use to run the business, inventory or the people that work in your business, there are always risks that can affect the ability of your business to function. What would happen if your truck broke down or your business had to shut down because of a fire? What would happen if you or one of your employees was sick for a long time? Being a good manager and careful employer can help reduce risks, but bad things can still happen to careful people. Protecting you and your business is a major priority and must be planned wisely.
To help address the risks that businesses face, there are a wide variety of insurance products available. Having an insurance policy means that if a specific kind of damage is done to your business, the insurance company will pay you an agreed upon amount of compensation. You pay for this insurance through monthly premiums (payments). Even if nothing happens you still pay the premiums each month. But, you have the security of knowing that if something bad does happen to your business, then the insurance company will pay the agreed upon amount. You agree to pay small amounts of money to the insurance company now, in exchange for a larger amount from the insurance company in case something bad happens.
The specific type of insurance you want depends on what you want to protect, or have insured. A good way to find out what insurance you need is to talk to an accountant or other business owners about what kind of insurance they have or would recommend. Keep in mind that some insurance can be tax deductible which can help offset the costs. Tax deductible means that you can take the cost of the insurance off from the business taxes that you have to pay to the government.
Another good option is to check with your local Chamber of Commerce. Each region in the North has a Chamber of Commerce that can provide a wide range of supports and benefits to businesses that join as members. These benefits can include cost-effective health, life and disability insurance tailored to small and mid-sized businesses. The Chamber can provide you with a good starting point in your search for the right insurance policy.
You can also talk to an insurance broker. Insurance brokers help you to identify what kind of insurance you need and what is the best insurance package for your budget. There are all sorts of insurances that you may be offered and the trick is to know which ones you need, which ones you’d like and which ones you can afford. Balancing these three things is one of the challenges in determining which insurance is best for you.
Different insurance policies cover different things, have different ways of paying out and can have varying costs depending on what is covered in the policy. For example, a million dollar life insurance policy for a 65-year old man who smokes will be much more expensive than one for a 22-year old man who has no health issues and doesn’t smoke.
The main types of insurance used by small businesses include:
Owners and Key Employees
- Life insurance — If an owner or key employee dies it can severely disrupt your business and leave your family responsible for any debts that the business has. Life insurance pays out an agreed upon amount of money if the person covered by the policy dies. The money goes to a person identified in the policy as the beneficiary and it can be anyone – a family member or friend.
- Key person insurance — Sometimes a business has employees that are essential to its operation. If the person leaves or dies, the business can be impacted. Key person insurance protects your business against this loss.
- Disability and critical illness insurance – If someone becomes disabled or has to leave work due to a critical illness, these insurance policies will provide money to help them. Disability insurance pays an amount of money for a set period of time due to an illness or injury that prevents working. Critical illness insurance usually pays out a sum of money upon diagnosis by a doctor of a critical illness that is covered under the policy.
- Key Man or Partnership insurance – If you have a business partner and they pass away, this kind of insurance provides you with money to purchase the partner’s share of the business. The money usually goes to the estate of the deceased partner.
Property and Earnings Insurance
Business need to protect their physical assets as well as their earnings. If a fire breaks out, it may take a while to do the repairs. Who pays for the repairs and compensates the business for loss of income?
- Property insurance — One of the most common types of insurance. This covers buildings and damages from fire, smoke, water leakage, etc.
- Vehicle insurance — This covers vehicles used by the business. If you use a vehicle for both personal and business use, you need to let the insurance company know. This may affect the premium you pay, but you don’t want to find out after an accident that you are not covered.
- Contents insurance — A lot of small businesses don’t own the building they operate out of nor do they have vehicles. Content insurance covers all the things contained within your business space – inventory, computers, furniture, even the coffee maker. If you don’t have this insurance, the building and contents could be damaged in a fire and you wouldn’t be compensated for your loss. For home-based businesses, you will need to talk to your insurance company to see if you need extra insurance to cover your business possessions.
- Business interruption insurance – This covers your business earnings if your business has to close due to damage to your business space or any other major disruptions.
Sometimes businesses can harm other businesses or people by making mistakes or by lack of proper care and precaution. The injured individual or organization may seek damages by suing the business for money to compensate for their injuries and damages. Liability insurance can help address this risk. There are three major kinds of liability insurance.
- General liability — A customer or employee may hurt themselves at your business slipping on ice or a wet floor. General liability insurance provides coverage for these kinds of injuries if they happen at the business location.
- Product liability — If a product you make doesn’t work correctly or hurts someone because of a flaw in the product, this insurance will cover this risk.
- Professional liability insurance — This is insurance used mostly by professionals such as doctors, accountants or engineers in case they make mistakes.
Once your business has been operating smoothly for some time, you may wish to think about increasing the benefits to your employees. Plans like health insurance can be an important issue for employees, particularly those with children. Health care plans can be expensive but can be tailored to meet your company’s needs and budget.
Remember, nobody expects bad things to happen, but it is wise to plan for the possibility. Insurance is an essential tool in your small business toolbox and one that every businesswoman needs to consider carefully.