If you’ve ever managed payroll in your business, you already know—it’s not just about writing pay cheques. Payroll comes with a whole host of responsibilities, and one of the biggest is making sure your payroll taxes are tracked and remitted on time. Get it wrong, and you’re looking at penalties, interest, and a whole lot of unnecessary stress.
The good news? Payroll taxes don’t have to be a headache. With the right system in place, you can keep everything organized, accurate, and compliant without spending hours buried in spreadsheets or worrying about CRA deadlines.
As a professional bookkeeper who’s worked with many small business owners, I’ve seen what works (and what doesn’t). Here’s my guide to making payroll tax tracking and remittance a breeze.
Step 1: Know What Payroll Taxes You’re Dealing With
Before you can track or remit payroll taxes, you need to know exactly what you’re collecting. The main deductions you’ll handle for employees are:
- Canada Pension Plan (CPP) contributions – Both the employee and employer contribute.
- Employment Insurance (EI) premiums – Both parties contribute here too, though the employer rate is higher.
- Federal and provincial income tax – Deducted from the employee’s wages based on CRA’s tax tables.
If you’re in Québec, you’ll have additional provincial programs such as the QPP (Québec Pension Plan), QPIP (Québec Parental Insurance Plan), and provincial income tax rules.
You’re essentially acting as a tax collector for the government, holding these amounts in trust until it’s time to remit them. Which means… they’re not yours to spend.
Step 2: Keep Payroll Taxes in Their Own ‘Home’
One of the simplest ways to avoid payroll tax headaches is to separate those funds immediately.
Here’s my favourite method:
- Each pay period, as soon as you run payroll, calculate the total deductions (employee and employer portions combined).
- Transfer that total into a separate savings account—think of it as your “CRA payroll tax account.”
- When remittance time comes, you’ll have the money sitting there ready to go.
It’s like paying your future self by removing the temptation to accidentally use that money for other business expenses.
Step 3: Set Up a Reliable Payroll System
You can try to manage payroll manually, but unless you love math and keeping up with CRA updates, continual changes to labour codes and employment standards, payroll software is the safer bet. The right system will:
- Calculate deductions automatically based on the latest tax tables.
- Generate pay stubs for your employees.
- Track year-to-date amounts for CPP, EI, and income tax.
- Prepare T4s and summaries at year-end without a scramble.
One of my favourites for small businesses include: Wagepoint – Friendly, straightforward, and built for teams.
Most payroll software also offers direct CRA integration, meaning you can remit taxes directly through the platform instead of logging in to My Business Account each time.
Step 4: Understand Your CRA Payroll Remittance Schedule
The CRA has different remittance frequencies depending on your average monthly withholding amount (AMWA). If you’re a new employer, you’ll usually start as a regular remitter.
Here’s a quick breakdown:
- Regular remitter – Pay by the 15th of the month after the pay period.
- Quarterly remitter – Available if your total annual deductions are low and you meet certain criteria.
- Accelerated remitter (threshold 1) – Pay up to twice monthly.
- Accelerated remitter (threshold 2) – Pay up to four times monthly.
Missing a due date can mean late payment penalties starting at 3% and climbing to 10% (plus interest). That’s money better spent on your business—or coffee.
Pro tip: Mark your remittance deadlines in your calendar and set automated reminders.
Step 5: Automate Remittances Whenever Possible
If your payroll software offers automatic remittances to CRA, use it. It’s one less thing for you to remember, and automation reduces the risk of human error.
If you prefer to do it manually, CRA’s My Payment service lets you pay directly from your bank account without waiting for cheques to clear. Some banks also allow you to add the CRA as a payee in your online banking, making it quick to send payments.
The faster and more reliably you send remittances, the less mental space payroll taxes will take up.
Step 6: Keep Payroll Records CRA-Ready
The CRA requires you to keep detailed payroll records for at least six years. That means you need to hang on to:
- Timesheets or hours worked records.
- Pay stubs and payroll registers.
- Records of deductions and employer contributions.
- Copies of T4 slips and summaries.
Even if you use payroll software, make regular backups and store them securely. Think of it as insurance—you may never need to pull them out, but if the CRA comes knocking, you’ll be glad you have them.
Step 7: Review Your Payroll Regularly
At least once a quarter, take a few minutes to review your payroll reports:
- Do CPP, EI, and tax deductions match CRA requirements?
- Have you hit the maximum annual contributions for CPP and EI (so you’re not over-deducting)?
- Are all employee records accurate and up to date?
Catching errors early saves a lot of cleanup later.
Step 8: Get Professional Help When Needed
Even with good systems in place, payroll can get tricky—especially if you have multiple pay rates, commissions, bonuses, or employees in different provinces.
If you’re unsure, a professional bookkeeper (hi, that’s me!) can:
- Set up your payroll system properly.
- Ensure your deductions and remittances are correct.
- Handle year-end reporting.
- Keep your business compliant with CRA rules so you can focus on running your business.
Think of it as outsourcing the headache so you can keep the happy parts of being a business owner.
The Bottom Line
Tracking and remitting payroll taxes doesn’t have to be a source of stress. By:
- Understanding your obligations,
- Separating payroll tax funds,
- Using reliable payroll software,
- Staying on top of deadlines, and
- Keeping CRA-ready records clean,
…you can handle payroll taxes smoothly and confidently.
When everything is in place, payroll becomes just another regular business process—not a monthly panic. And that means you can spend less time worrying about taxes and more time growing your business (or enjoying that second cup of coffee without a guilty conscience).
