The moment you pay your first employee, you’re a payroll operator. You withhold income tax, CPP, and EI from every cheque, add your own employer share on top (roughly 7 to 8 percent of salary in 2026), send it all to CRA by the 15th of the following month, and issue a T4 by the end of February. The withheld money is never yours. Miss a remittance and the penalties start at 3 percent and land automatically.
Most clinic owners hire their first employee, usually a receptionist or admin, when the booking and billing work starts eating into treatment hours. It’s the right move. But payroll is the one back-office job where “I’ll figure it out later” gets expensive fast, because the deadlines are monthly and the penalties don’t wait for a warning letter.
Here’s what you’re actually signing up for.
What comes off every paycheque
Each pay period you withhold three things from the employee’s gross pay: income tax based on their TD1 forms, CPP contributions at 5.95 percent of pensionable earnings up to $74,600 for 2026 (earnings between $74,600 and $85,000 trigger a second CPP contribution at 4 percent), and EI premiums at $1.63 per $100 of insurable earnings up to $68,900.
Then you add your own share. You match CPP dollar for dollar, and you pay 1.4 times the employee’s EI premium, which works out to $2.28 per $100. On a $52,000 clinic admin, the employer share is about $2,886 of CPP and $1,186 of EI, roughly $4,070 a year on top of the salary. Budget for the all-in cost, not the posted wage.
The deadline that actually matters
Everything you withheld, plus your employer share, goes to CRA by the 15th of the month after the month you paid the employee. New employers start as regular remitters, so that monthly rhythm is yours from the first cheque.
This is the deadline that hurts. Late remittances draw an automatic penalty of 3 to 10 percent depending on how many days late, and repeat misses in the same year can reach 20 percent, plus interest. There’s no materiality threshold and no first-timer grace built into the math.
The part owners underestimate: source deductions are trust money. You held it back from someone else’s pay on the government’s behalf, so CRA treats it as its own funds sitting in your account, and it collects more aggressively than it does for income tax. If the clinic is incorporated, directors can be held personally liable for deductions that were withheld and never sent. The corporate shield doesn’t cover this one.
The costs that aren’t on the paystub
Vacation pay accrues from day one, at a minimum of 4 percent in Ontario, along with paid statutory holidays. Depending on your province and how your clinic is classified, workplace injury insurance premiums may also apply. And Ontario has an Employer Health Tax, though the first $1,000,000 of payroll is exempt for eligible private-sector employers, so a clinic with one admin owes none of it. None of these are big dollars with one employee, but each carries its own registration and filing, which means each is its own way to be offside without knowing it.
Then February arrives. T4 slips for every employee, and the matching summary to CRA, are due by the last day of the month, with per-day late-filing penalties if they’re not.
Paying someone without payroll isn’t a shortcut
Clinics sometimes try to sidestep all of this by paying the new hire as a contractor who invoices monthly. Sometimes that’s legitimate. Often it isn’t, and CRA decides based on the real working relationship, not the label on the agreement.
On payroll
You control the schedule and the work, they use your systems, and they carry no risk of loss. Source deductions, employer contributions, vacation pay, and a T4 all apply, no matter what the contract calls them.
Invoices you
They run their own business, set their own hours, and can profit or lose. No source deductions, but their fees may carry HST your exempt clinic can’t recover, and a wrong label invites reassessment.
A receptionist who works your front desk, on your hours, on your software, is an employee. Misclassify them and a CRA review can assess back CPP and EI, both shares initially charged to the clinic, plus penalties and interest, and open the door to vacation pay claims. We walk through the same trap on the practitioner side in our guide to hiring an associate versus an employee, and the cost math in the associate versus employee comparison.
Common questions
Does a part-time or casual employee still need payroll?
Yes. There’s no minimum hours threshold. Deductions, remittances, and a T4 apply from the first dollar of wages, whether it’s five hours a week or forty.
Does HST apply to wages?
No. Salaries and wages are outside the HST system entirely, which is one quiet advantage of hiring over contracting for a clinic that can’t claim input tax credits anyway.
Can someone else just run this for me?
That’s the normal answer, honestly. Payroll for one or two staff is cheap to run properly and expensive to run late. Most of our clinic clients hand it off with their bookkeeping and never think about the 15th again.
Hiring your first employee and want payroll set up right from cheque one? Tell us about the hire and we’ll take it from there.