Hiring Your First Employee? Here's the Payroll Side of It.

You’ve decided to hire your first employee. Congratulations — that’s a real milestone. It means your business has grown past what you can do alone.

Now here’s the part nobody tells you about at the networking event: before you can pay someone, there’s a stack of government paperwork and registrations to sort out. None of it is hard, but all of it is mandatory.

This is the checklist. Work through it in order and you’ll be set up properly from day one.

1. Open a CRA payroll account

You need a payroll account with the Canada Revenue Agency before your first pay date — not after. This is the account the CRA uses to track the taxes and contributions you withhold from your employee’s pay.

Register online through CRA Business Registration Online (you’ll need your Business Number), or call the CRA business enquiries line. It takes about 10 minutes either way.

You’ll get an RP account number — something like 123456789RP0001. You’ll use this number on every remittance and every annual filing.

If you don’t have a Business Number yet, the CRA will assign one as part of the registration process.

2. Collect TD1 forms — federal and Ontario

Every new employee needs to fill out two TD1 forms: the federal TD1 and the Ontario TD1. These determine how much income tax you withhold from each paycheque.

The forms should be completed on or before the employee’s first day of work. Not their first payday — their first day.

If an employee doesn’t fill out a TD1, you’re required to withhold tax as if they only claimed the basic personal amount. That usually means you’ll over-withhold, and they’ll be annoyed when their take-home pay is lower than expected.

The CRA updates these forms every year. Make sure you’re using the 2026 versions.

3. Collect their Social Insurance Number

You’re legally required to collect your employee’s Social Insurance Number (SIN) — and they must provide it within 3 days of starting work. You need it for T4 reporting and for filing ROEs.

One important note: under PIPEDA (Canada’s federal privacy law), you need to protect this information. Don’t store SINs in a shared spreadsheet or an unencrypted email. Use a payroll system that handles personal data securely — or let your payroll provider manage it.

4. Choose a pay structure

Before the first pay run, you need to decide the basics:

Hourly or salary? Hourly employees get paid for actual hours worked. Salaried employees get the same amount each pay period regardless of hours (with some exceptions).

Ontario minimum wage as of October 1, 2025 is $17.20/hour. If a 2026 increase is announced, you’ll need to adjust. The government usually announces changes months in advance.

Overtime in Ontario kicks in at 44 hours per week (not 40, like some people assume). The rate is 1.5 times the employee’s regular rate. Some industries have different rules — check the Employment Standards Act if you’re unsure.

You also need to pick a pay frequency: weekly, biweekly, semi-monthly, or monthly. Biweekly is the most common in Ontario. Choose what works for your business and your employee’s expectations.

5. Set up direct deposit

Most employees expect direct deposit. To set it up, you need three pieces of information from the employee:

• Bank transit number (5 digits)
• Financial institution number (3 digits)
• Account number (7 to 12 digits)

The easiest way to get this is from a void cheque — all three numbers are printed at the bottom. If the employee doesn’t have cheques (common these days), most banks provide a direct deposit form through their online banking that shows the same information.

Direct deposit is faster, cheaper, and more reliable than paper cheques. Set it up from the start.

6. Register with WSIB

In Ontario, most employers must register with the Workplace Safety and Insurance Board (WSIB) within 10 calendar days of hiring their first worker. This applies whether the employee is full-time, part-time, or seasonal.

WSIB premiums vary by industry classification. Construction and trades pay higher rates than office-based businesses. You can register online at wsib.ca.

Some industries are exempt from mandatory WSIB coverage — most notably financial services, some professional offices, and certain personal services. Check WSIB’s classification list before assuming you’re exempt. If you’re in trades, agriculture, manufacturing, or retail, registration is almost certainly required.

Not registering when you should have can mean retroactive premiums plus penalties — and you won’t have coverage if someone gets hurt on the job.

7. Make your first remittance on time

After your first pay run, you’ll have withheld CPP, EI, and income tax from your employee’s gross pay. You also owe the employer portions of CPP and EI on top of that.

All of this money — the employee deductions plus your employer contributions — needs to go to the CRA. New employers default to monthly remitting, which means everything you withhold in a given month is due by the 15th of the following month.

So if you run your first payroll in May, your first remittance is due by June 15th.

Don’t miss this deadline. Penalties start at 3% for amounts that are even one day late. The CRA has no “oops” policy for new employers.

8. When they leave: filing an ROE

At some point, every employment relationship ends. When it does, you must file a Record of Employment (ROE) electronically within 5 calendar days of whichever is later: the employee’s last day of work or the last day they were paid.

The reason for leaving matters — the code you enter on the ROE (quit, laid off, terminated, end of contract, etc.) determines whether the employee qualifies for Employment Insurance. Use the correct code. Service Canada follows up on discrepancies, and getting it wrong can delay your former employee’s claim.

Electronic ROE filing is done through Service Canada’s ROE Web portal. You’ll need to register for access if you haven’t already.

9. A few more things on the horizon

Ontario has been expanding its employment standards in recent years. A couple of things worth knowing as you grow:

Pay transparency: As of 2026, Ontario requires businesses with 25 or more employees to include salary ranges in job postings and to disclose the use of AI in hiring. This probably doesn’t apply to you yet if you’re hiring your first employee — but it’s worth knowing the rules before you get there.

Job posting requirements: Ontario also requires publicly advertised job postings to include certain information. Again, mostly relevant as you scale, but the direction of regulation is toward more transparency, not less.

We can set all of this up for you

Most of our clients come to us right at this stage — they’re hiring their first employee (or their first few) and don’t want to get the payroll setup wrong. We handle the CRA registration, the deduction calculations, the remittances, and the T4s. You hand us the hours; we handle the rest.

After a decade of doing this for Ontario small businesses, we’ve set up a lot of first payrolls. It’s one of our favourite things to help with.

Tell us about your situation and we’ll get you sorted.