Can a sole proprietorship hire employees in Ontario?
Yes. A sole proprietorship can hire employees just like a corporation. Being incorporated is not a prerequisite for becoming an employer. Once you hire someone, you take on the full range of employer obligations under Ontario and federal law.
As an employer, you must register for a CRA payroll account and deduct and remit income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from each employee's pay. You contribute the employer's share of CPP and EI on top of those deductions. Remittances are due on a schedule set by the CRA.
Ontario's Workplace Safety and Insurance Act requires most employers to register with the WSIB and pay premiums based on their industry and payroll. Failure to register when required exposes the sole proprietor personally to assessments and penalties.
The Employment Standards Act, 2000 (Ontario) governs minimum wage, vacation entitlements, public holiday pay, overtime, notice of termination, and severance pay. As a sole proprietor-employer, you are personally liable for compliance with these rules — another reminder that employee-related risks can be significant for an unincorporated business.
Key takeaways
- A sole proprietorship can hire employees; incorporation is not required.
- Employers must register for a CRA payroll account and remit source deductions regularly.
- WSIB registration is required for most employers in Ontario.
- Employment Standards Act obligations apply fully — and personally — to sole proprietor employers.