Hiring your first employee in Ontario: the payroll setup checklist

The 30-second version

Before you run a first paycheque in Ontario, you need a CRA payroll program account, a clear read on which deductions come off pay (CPP, CPP2, and EI), a plan for remitting those deductions on the CRA's schedule, and — within 10 days of the hire — a WSIB registration. Get the account and the WSIB registration sorted first; the deduction math and remittance rhythm follow once those two are in place.

Step 1: open a payroll program account

If your business already has a CRA business number, adding payroll is a matter of registering an RP program account against it. If you don't have a business number yet, you'll set one up as part of the same process. Do this before the first payday — the account number is what identifies your remittances to the CRA, and you can't remit deductions without it.

Step 2: know your remitter type and its deadlines

Remittance frequency isn't something you choose; the CRA assigns it based on your average monthly withholding amount (AMWA), generally looked at from two calendar years back:

A first-time employer with no prior withholding history typically starts in the quarterly or regular bracket, so mark those dates now — missing a remittance deadline is one of the easier CRA penalties to trigger and one of the easiest to avoid.

Step 3: what comes off each cheque (2026 rates)

Three federal deductions apply to most employees' pay, and you match a portion as the employer:

• CPP: for 2026, the base rate is 5.95% each for employee and employer, on pensionable earnings up to the $74,600 maximum, with a $3,500 basic exemption — a maximum annual contribution of $4,230.45 each.
• CPP2: a second, additional CPP contribution applies at 4% each for employee and employer on earnings between $74,600 and the $85,000 additional maximum for 2026, capping the extra contribution at $416 each.
• EI: for 2026, the employee premium rate is 1.63% of insurable earnings up to $68,900 in maximum insurable earnings, capping the employee premium at $1,123.07 for the year; employers pay 1.4 times the employee rate (roughly 2.282%), capping the employer premium at $1,572.30 per employee.

Federal and provincial income tax deductions apply on top of these and are calculated from the employee's TD1 forms and pay amount — there's no flat rate to quote, which is exactly the kind of calculation payroll software should be doing for you rather than a spreadsheet.

Step 4: T4 obligations

A T4 slip is required for any employee you deducted CPP/QPP, EI, or income tax from, or — barring a specific exception — if you paid them more than $500 in the calendar year. T4 slips and summaries are due, both to the CRA and to your employee, by the last day of February following the calendar year they cover. That deadline arrives fast after year-end, and it's much less painful when the payroll records behind it were reconciled monthly rather than assembled in a scramble.

Step 5: register with WSIB — within 10 days

Most Ontario businesses with employees, including family members and sub-contractors, must register with the WSIB within 10 calendar days of hiring their first employee. Construction is treated differently: expanded compulsory coverage there generally reaches sole proprietors, partners, and independent operators too, not just employees. Outside construction, business owners themselves (sole proprietors, partners, executive officers) aren't automatically covered, but can opt into WSIB insurance voluntarily. Ten days moves quickly once a start date is set — put it on the calendar the day you make the offer, not the day they start.

One more thing to check: Employer Health Tax

Ontario also levies an Employer Health Tax (EHT) on payroll, separate from CPP, EI, and WSIB. We're deliberately not quoting a rate or exemption threshold here — that detail needs to come straight from ontario.ca for your specific payroll size, not from a generic guide. Check the current EHT rules on ontario.ca before your first payroll run, or ask us and we'll confirm the number that applies to you.

Where this fits with bookkeeping

Payroll doesn't sit apart from your books — every remittance, T4, and WSIB premium flows straight into your monthly reconciliation. That's what our monthly bookkeeping keeps clean and current, so payroll records aren't a scramble at year-end — starting at $200/month, HST filings included.