How do I set up a payroll account when my Ontario corporation first pays me a salary?

Before your corporation makes its first payroll payment, it must register a payroll deductions program account with the CRA. You register online through the CRA's My Business Account portal, by phone, or by mail. The payroll account number is separate from the corporation's income tax account and is identified by the suffix RP followed by a reference number.

Once registered, the corporation must deduct income tax, CPP contributions, and where applicable EI premiums from each salary payment and remit them to the CRA by the required deadlines. Most new small businesses are monthly remitters — the remittance is due by the 15th of the month following the month in which the deductions were withheld. The CRA will assign your remitter category based on your average monthly withholding amounts and notify you if it changes.

Failure to register or remit on time attracts penalties and interest. Directors of the corporation are jointly and severally liable with the corporation for unremitted payroll deductions, meaning the CRA can pursue directors personally. Many accountants handle payroll registrations and remittances for their clients; if you are managing it yourself, set calendar reminders for the 15th of each month.