If you run a small business, payroll sits in that weird middle space. It’s not very glamorous. It’s not your core business. But it has to be right, because Canada Revenue Agency (CRA) mistakes come with real penalties (and interest), and your team depends on you for their paycheques. Most payroll mistakes don’t come from anything dramatic. They come from a missed deadline, a wrong assumption, or a misunderstanding of complicated rules. Here are five of the most common errors, why they happen, and how to keep them off your desk. If a bookkeeper or accountant runs payroll for you, these are worth a shared read.
1. Missing a CRA remittance deadline
Every time you run payroll, you withhold CPP, EI, and income tax, and you owe those amounts to the CRA by your remittance due date. For most smaller employers, that’s the 15th of the month after payday, though your exact remittance schedule depends on your remitter type. Miss it and the penalty climbs with the delay: 3% at one to three days late, rising to 10% once you’re more than seven days late or don’t remit at all, with compound daily interest on top and up to 20% for a repeat miss in the same calendar year. Simply hitting your due dates, or automating the payment, is the fix. Moving off manual spreadsheets is one way to do that. Wagepoint calculates, reports, and remits these tax amounts on your behalf, to the CRA and Revenu Québec alike. That saves time, reduces errors, and helps you avoid missing a deadline. Quebec payroll runs its own remittance stream for QPP, QPIP, and Quebec income tax. It’s separate from the federal CPP, EI, and tax remittance, but Wagepoint keeps both on schedule.
2. Getting worker classification wrong
Calling someone a contractor doesn’t make them one. The CRA looks at the real working relationship, not the label on the invoice, and it weighs things like who controls the work, who supplies the tools, and who carries the chance of profit or risk of loss. Get it wrong, and if a contractor is reclassified as an employee, you’re generally the one left owing the CPP and EI that should have been deducted, plus penalties and interest. The test is a bit different in Quebec, where the Civil Code applies rather than common law. When you’re not sure, you can ask the CRA to make the call before it becomes a problem. Their guide on how to determine a worker’s employment status is the place to start.
3. Mishandling statutory holiday and vacation pay
Statutory holiday pay and vacation rules vary by province and territory. Both the holidays themselves and the formulas are different depending on where you operate. That’s easy to get wrong when you’re busy, and underpaying is one of the more common employment standards complaints, which usually means back pay and an awkward conversation with your team. In provinces where the daily wage method applies, stat holidays are calculated automatically and added to the payroll by Wagepoint if you enable the auto-stat calculation option. For provinces with more complex rules, like BC, the free Timesheets add-on in Wagepoint turns that into a few mouse clicks instead of spreadsheets.
4. Filing the ROE late, or not at all
When an employee has an interruption of earnings, whether that’s a termination, a layoff, a leave, or seven or more consecutive days without work, you must issue a Record of Employment. Generally speaking, for those filing electronically, you have only five calendar days after the end of that pay period to have it submitted. A late or missing ROE holds up someone’s EI claim and can carry penalties, and it tends to arrive right when you have the least time for it, especially if you’re manually filling out a paper or electronic ROE form. Wagepoint generates electronic ROEs in seconds, sends them directly to Service Canada, and takes the scramble out of a departure.
5. Treating year-end T4s as a February scramble
You must issue employees a T4 slip and file your T4 return with the CRA by the last day of February following the calendar year. That moves to the next business day if it lands on a weekend. A T4 is required for anyone you paid more than $500, or anyone you deducted CPP, EI, or income tax from. Late filing carries significant daily penalties per slip. The real issue is that most February headaches actually start months earlier. Make a mistake on a CPP, EI, or income tax amount, and suddenly you’ve received a Pensionable and Insurable Earnings Review (PIER) from CRA. Leaving you on the hook to pay the difference between what was owed and what was paid. But a little planning goes a long way, which is why our customers have their payroll calculations handled throughout the year, then their T4s generated and submitted for them at year-end.
As one Wagepoint customer put it:
“At the end of the year, the T4s, I would have no idea how to do those. But with Wagepoint, it’s quite straightforward. I get an email telling me what I have to check, and I just hit a button.”
— Dr. Melanie Little, Owner and Principal Dentist, Roncy Dental Studio
Quebec employers file an RL-1 slip and summary with Revenu Québec on top of the federal T4.
The pattern underneath all five
Payroll has a lot of moving parts and the cost comes from having to hold all of them in your head at once, on top of everything else you’re running. A missed date or an untracked benefit isn’t carelessness. It’s what happens when payroll is one job among ten. The businesses that avoid these penalties aren’t memorizing the rules. They’re the ones who figured out that with the right toolset, you don’t need to.
That’s the whole idea behind Wagepoint. It keeps dates on schedule, the calculations, and the filings off your plate. Deductions get worked out and remitted to the CRA and Revenu Québec on your behalf. ROEs get generated when someone leaves, and T4s get prepared at year-end. Less thinking, less hassle, less room for errors, and ultimately more time to run your business. You can see how it works, or start a free trial, at wagepoint.com/payroll.