Payroll for one employee

What is the easiest payroll software to use?

There are dozens of payroll companies out there, all offering different levels of usability. Some are more “DIY,” while others may send a company representative to your business to train you on the product. The easiest solution for you will depend on your needs.

How do I do payroll manually?

Processing payroll manually requires painstaking data entry and recordkeeping and the ability to meet deadlines. If you choose to pay your one employee this way, you’ll need to:

1. Agree upon a salary or hourly wage
2. Use a time clock or other means to track hours worked
3. Calculate gross wages
4. Deduct any other pre-tax benefits you offer
5. Withhold any taxes that apply
6. Calculate employer contributions to CPP, employment insurance
7. Deduct garnishments and post-tax benefits, if applicable
8. Pay your employee by cheque or direct deposit

Keep in mind that even with just one employee, there’s a chance you can make a mistake when processing payroll manually, which may result in fines from government agencies.

How much does ADP charge for one employee payroll?

Cost is an important consideration for any business, but it’s also important to think about the overall value you’ll receive from a payroll service provider. ADP offers various levels of customer support, integrations, and related products, which affect price totals. We’ll work with you to determine the package that best suits your business needs.

How do I set up payroll for one employee?

To pay your one employee, whether you’re doing it yourself or working with a payroll service provider, you will need:

• Social insurance number (SIN)
• Employee’s tax withholding documents
• Defined pay periods

How to set up payroll for one employee in Canada?

Here are 5 steps outlining how you can set up payroll for one employee in Canada:

1. Start a payroll account through the CRA. If you have a business number, simply add a payroll account to it and get a 15-character number from CRA for tax tracking. Without a business number? One will be assigned during the payroll account setup.
2. Collect your employee's personal details which can be important for payroll processing, such as their Social Insurance Number. Then have them fill out Federal and Provincial TD1 forms, which help in determining the income tax deductions. Quebec employees need to complete an additional Source Deductions Return form.
3. Set aside employee and employer contributions for taxes, Canada Pension Plan (CPP), and Employment Insurance as per the legal requirements. You can use the CRA’s online calculator for precise calculations of these deductions, factoring in various tax rates across provinces and territories.
4. Timely remit the calculated deductions to the CRA. You may do this through its website, a financial institution, or online banking. Regular remittances are due monthly by the 15^th and it may help to avoid delays to prevent penalties. With a consistent track record, you might qualify for quarterly instead of monthly remittances.
5. Wrap up the tax year by issuing T4 slips to employees, listing earnings, benefits, and deducted amounts for CPP, EI, and income taxes. Also, submit a T4 summary to the CRA by the end of February. Quebec employers additionally provide Relevé 1 slips and a summary of salaries and deductions.

How much does an employer pay for employee taxes in Canada?

Canadian employers are responsible for matching their employees' contributions to the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), depending on the province. For 2025, the CPP contribution rate is set at 5.95%, with a maximum contribution limit of CAD$4,034.10. In Quebec, the contribution rate remains higher at 6.40%, capped at CAD$4,339.20. Additionally, Canada has formed social security agreements with various nations, which help individuals who have worked in both Canada and other countries manage their pension contributions.

Employers are also required to contribute to Employment Insurance (EI), which provides financial assistance to individuals during job loss or certain leaves, such as maternity or illness. The EI contribution rate is 1.64% (non-Quebec) with an annual cap of CAD$1,508.97, while Quebec’s rate is 1.647%, capped at CAD$1,204.94. Furthermore, several provinces impose an Employer Health Tax (EHT), calculated based on total employee salaries. This tax varies significantly across provinces: for instance, Ontario's rates range from 0.98% to 1.95%, and British Columbia applies a rate of 1.95% to 2.92%, with specific exemptions based on payroll size. Each province also has its own unique thresholds, and exemption limits that employers must navigate.

How do I pay myself from my corporation?

If you own an incorporated small business in Canada, you can pay yourself through salary, dividends or a mix of both. A salary is considered employment income, so your corporation must run payroll, withhold taxes and CPP contributions, remit them to the CRA and issue you a T4 at year-end. Dividends are paid from after-tax profits, reported on a T5 and may offer tax advantages, but they don’t create RRSP room or require CPP contributions. Many business owners choose a combination for steady income and tax efficiency.

If you take a salary, you’ll need to register for a CRA payroll account, decide on a pay schedule, calculate deductions, remit them on time and prepare year-end slips. While this can be done manually, it’s easy to make errors, especially when navigating federal, provincial and territorial rules. Dividends are simple to administer but may not provide the same personal financial benefits as a salary.

The right payroll software for small businesses in Canada can simplify the process by automatically calculating deductions, remitting payments to the CRA and creating T4/T5 slips. This ensures accuracy, compliance and less administrative work so you can confidently pay yourself from your paycheck and focus on growing your business.