First Employee Hired? – A Complete Employer Checklist by a Montreal CPA Firm Near You

Introduction

Hiring your first employee is a major milestone for any Canadian business—but it also marks the beginning of some of the most complex compliance obligations under federal and provincial law. Whether your first employee is full-time, part-time, seasonal, contract-to-hire, or even a family member, CRA and provincial agencies require that you follow strict payroll, employment, safety, and documentation rules. Missing even one step—such as failing to register for payroll, not collecting TD1 forms, or ignoring provincial employment standards—can result in fines, penalties, payroll audits, or employment law complaints. This guide provides a complete checklist for hiring your first employee in Canada, ensuring that your business is compliant from day one.

Legal and Regulatory Framework

When employers hire their first employee, multiple laws and agencies become involved:

• Income Tax Act – requires withholding and remitting income tax
• Canada Pension Plan Act – requires CPP contributions
• Employment Insurance Act – requires EI premiums
• Excise Tax Act – governs payroll remittance procedures
• Provincial Labour Standards Acts – minimum wage, overtime, vacation, termination rules
• Occupational Health and Safety Acts – employer safety obligations
• Workers’ Compensation Acts – mandatory workplace insurance (CNESST, WSIB, WorkSafeBC, WCB, etc.)
• Québec Tax Administration Act – QPP, QPIP, HSF, RL-1 obligations for Quebec employers

These laws form the mandatory framework for hiring and paying your first employee in Canada.

Key Court Decisions

Several court rulings highlight the importance of employer compliance from the moment the first employee is hired.

1. Soper v. Canada

The court confirmed that corporate directors are personally liable for unremitted payroll deductions—even for small businesses with their first employee.

2. Caron v. Québec

The court upheld penalties against an employer for inaccurate RL-1 filing, demonstrating that small-business status does not excuse noncompliance.

**3. WSIB v. 674130 Ontario Ltd.

The employer failed to register for workers’ compensation when hiring staff. The court upheld WSIB penalties and back payments.

4. Hickey v. Canada

The employer’s claim of payroll “misunderstanding” was rejected. Payroll deductions and remittances must be accurate from day one.

These rulings show that courts and tax agencies expect full compliance even for new employers.

Why CRA and Provinces Target This Issue

Hiring your first employee is one of the most common triggers for audits because:

• new employers often do not understand payroll rules
• T4/T4A errors are frequent in first-year filings
• many small businesses fail to remit payroll taxes on time
• worker misclassification (contractor vs employee) is common
• CRA monitors new payroll accounts closely
• provinces monitor CNESST/WSIB/WCB registration gaps
• mistakes in vacation pay, overtime, and statutory holiday rules lead to labour complaints

Red flags include:
• paying employees before registering for payroll
• no TD1 or provincial tax forms on file
• mismatched T4/T4A amounts
• missing CNESST/WSIB registration
• late or missing remittances
• hiring family members without proper payroll documentation

Mackisen Strategy

At Mackisen CPA Montreal, we provide a complete employer onboarding system for hiring your first employee. Our structured approach includes:

1. Registering All Required Accounts

• CRA payroll account
• Revenu Québec payroll accounts (if applicable)
• Workers’ compensation (CNESST, WSIB, WCB, etc.)
• Provincial employer registries (where required)

2. Collecting Required Employee Documentation

• Federal TD1 form
• Provincial TD1 form
• SIN verification
• Employment contract
• Direct deposit information
• Emergency contact form

3. Payroll System Setup

• selecting payroll frequency (weekly/bi-weekly/semi-monthly)
• configuring payroll software
• setting up CPP/QPP, EI/QPIP deductions
• establishing employer contributions
• creating payroll remittance calendar

4. Employment Standards Compliance

We ensure you follow provincial rules regarding:
• minimum wage
• overtime rules
• statutory holidays
• vacation pay
• probation periods
• termination requirements

5. Workplace Safety Compliance

• registering for workers’ compensation
• determining industry risk classification
• creating mandatory safety policies and onboarding documentation

6. Ongoing Guidance

• monthly payroll remittances
• year-end T4 and RL-1 preparation
• taxable benefits tracking
• audit protection for payroll and labour audits

This process ensures your business is fully compliant before and after you hire your first employee.

Real Client Experience

A new tech startup hired its first developer without registering for payroll and paid them by e-transfer. CRA reassessed several months of unremitted payroll deductions. We opened a payroll account, corrected filings, and applied for penalty relief.

A Montreal restaurant hired part-time staff but failed to register with CNESST. After a workplace injury, CNESST demanded retroactive payments. We registered the employer, recalculated premiums, and negotiated reduced penalties.

A wellness clinic misclassified its first service provider as a contractor. CRA later reclassified the worker as an employee. We corrected payroll setup, issued T4s, and rebuilt the workforce structure.

A small construction company issued paycheques but did not collect TD1 forms. CRA questioned payroll withholding accuracy. We updated all documentation and established compliance systems.

Common Questions

Employers often ask whether family employees require payroll. Yes—unless they meet very narrow exemptions.
Others ask whether payroll is required for part-time staff. Yes—employment status triggers payroll, not hours worked.
Some ask whether contractors need payroll. Not unless they are misclassified and are legally employees.
Another question: Do I need workers’ compensation? Yes—nearly every province requires coverage for any employee.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps new employers establish complete payroll and employment compliance from day one. Whether you are hiring your first employee or building your team, our experts ensure precision, legal compliance, and full protection from CRA and provincial authorities.