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How To Do Nanny & Caregiver Payroll

There's a lot to know about becoming an employer

When your family hires a nanny, caregiver, or other type of salaried employee, your household becomes an employer, and with that, assumes all the legal & accounting responsibilities of a Canadian business.

For anyone curious about all that is involved, we've outlined the major steps here. But you are also free to skip this and let us sort it out.

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Registration

  • Register yourself as an employer with the CRA.
  • Call the CRA and request a business number.

Set Up Payment

  • Set up direct deposit for your caregiver.
  • Request your caregiver's banking information, go to your bank, and request the agreed upon amount is removed from your account and into his or her's at the agreed upon frequency.
  • If your caregiver's hours and payroll change, you'll have to head to the bank on a regular basis to make this update.

WSIB/WCB Registration

  • You may be required to obtain insurance for your caregiver, in which case you must register a WSIB or WCB account. If you're not required, you should still consider coverage.
  • Call WSIB or WCB and they'll provide necessary forms for you to fill out.

Calculate Source Deductions

  • You must calculate and remit your caregiver's deductions, such as their federal and provincial income tax, CPP and EI premiums, as well as your employer portion of CPP and EI premiums.

Remit Source Deductions

  • Every single month you must remit your employer source deductions to the CRA no later than the 15th of the month for the previous month's deductions.

Prepare and Provide Pay Stubs

  • You absolutely must prepare and provide your caregiver with a pay stub every pay period. This should include your caregiver's Gross and Net wages, as well as his or her federal and provincial income tax, CPP, and EI deductions.
  • It should also include the pay period, wage rate, and any taxable benefits such as room and board, if applicable.

Pay WSIB/WCB premiums

  • Every quarter you must calculate and pay your caregiver's WSIB/WCB premiums.

Prepare T4s

  • At tax time, you must prepare and file your caregiver's T4 documents with the CRA. 
  • You'll need to provide your caregiver with a copy, have a copy for the CRA, and will also want a copy for your own records.

It is not hard to make miscalculations, to be late with remittances, or to commit other payroll errors that will result in fines and other problems for you or your caregiver.

 

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