Payroll Options for Small Canadian Employers: Software, Services or Your Accountant
If you’re a South African who has started a small business in Canada and just hired your first employee, here’s the question that lands on your desk before anything else: who actually runs payroll, and how?
The payroll options for small Canadian employers come down to three real routes, and the right one depends less on how many people you employ and more on how much time you want to spend thinking about it.
Running it yourself, with software
At the smallest scale — one or two employees — some owners handle payroll directly using dedicated software. It calculates deductions, generates pay stubs and files the remittances on a schedule you set. The appeal is control and cost; the trade-off is that you’re the one who has to notice when a rate changes or a form needs updating. Canada Revenue Agency runs a free Payroll Deductions Online Calculator (PDOC) that any employer can use to check a calculation against — worth bookmarking regardless of which route you choose, because it’s the one place you can independently verify a number.
Outsourcing to a payroll service
The second route hands the whole cycle to a dedicated payroll provider. Each pay run, the service calculates gross-to-net for every employee, deducts and remits the required amounts to CRA on your behalf, deposits net pay, and issues pay stubs. What you’re buying isn’t just the math — it’s the remittance deadlines being someone else’s problem, and a paper trail if CRA ever asks a question. It costs more than doing it yourself, and for many small employers that’s the entire point: the time saved is worth more than the fee.
Whether your accountant will do it
People ask this constantly: can your accountant run payroll for you? Often, yes — many Canadian accounting firms offer payroll as an add-on to bookkeeping, particularly for small clients where volumes are low. It can be the most efficient option if you’re already paying an accountant for tax and bookkeeping work anyway, since payroll data feeds directly into your books. It’s worth asking directly rather than assuming: not every firm offers it, and some prefer to refer you to a dedicated payroll provider instead.
What actually has to happen every pay run, whoever does it
Regardless of which route you pick, the underlying mechanics don’t change. Canada Pension Plan and Employment Insurance are deducted from employee pay, matched (CPP dollar-for-dollar, EI at 1.4 times the employee rate) by the employer, and remitted to CRA on a schedule tied to your business size. Quebec runs its own version of this — QPP instead of CPP, plus QPIP parental insurance — so if you’re employing someone in Quebec, confirm with whoever’s running payroll that they’re applying the Quebec rules rather than the rest-of-Canada set.
The honest trade-off
None of the three options is free of admin. Software still needs you to notice a change in rates or rules. A payroll service still needs accurate hours and new-hire information from you on time. An accountant still needs you to flag when someone starts or leaves. What changes between the three is who’s responsible for catching the mistake if something’s missed — you, a provider whose whole job is this, or a firm that already knows your numbers.
For a South African employer new to this system, that last question is often the deciding one. Getting it wrong on your own dime is a more expensive lesson than most people expect it to be.