Hiring a Nanny? … Welcome to being an Employer.
We hear from our clients quite regularly that they are employing a nanny, we then have the unfortunate task of welcoming them to the world of payroll withholdings, WCB and T4 slips. Here are some of the steps one has to be aware of when they embark on being an ‘Employer’. Don’t worry we can work with you and provide payroll support for your new job.
Step 1: Register with the Canada Revenue Agency (CRA) for a business number.
- This number will be your CRA account, which you will use to remit withholding amounts, and issue T4 slips and Records of Employment (ROE).
- CRA telephone number to setup payroll account: 1-800-959-5525. CRA will provide you a nine-digit number over the phone after the payroll account is setup.
Step 2: Register for an account with Work Safe BC (WCB)
- When you employ a nanny or caregiver (full-time, part-time, or a casual basis), you are considered to be a residential employer and are generally required to register with WCB. There are some situations when you are exempt from registering, such as if the employee works less than 8 hours per week, or if the purpose of employment is to care for your children before and after school for an average of less than 15 hours per week.
- Register WCB account online at: http://www.worksafebc.com/insurance/registering_for_coverage/register_with_worksafebc/default.asp
Step 3: Calculating deductions
- Payroll deduction online calculator
- Calculate the net and gross pay, along with the CPP and EI amounts for the pay period.
- Pay your nanny/ caregiver the net amount on payday (must be paid at least twice per month as set out by the BC Employment Standards Act). On payday, the employee must be provided with a paystub that includes necessary information such as total hours worked, rate of pay, earnings, and deductions.
Step 4: Remitting deductions
- Calculate, prepare, and file monthly remittances of source deductions to the CRA (income tax withheld, employer and employee portions of EI, and employer and employee portions of CPP). Remittances are due by the 15th of the month following the pay period. For example, for amounts paid in June, the remittance is due July 15th.
- Monitor changes in tax and employment regulations.
Step 5: Completing and filing information return annually
- File T4 Slip and T4 Summary for the nanny by the end of February each year summarizing the nanny’s prior year income.
Step 6: Completing a Record of Employment
- When your nanny is terminated or quits as the employer you will have to issue a Record of Employment (ROE) generally within 5 calendar days of: the first day of interruption in earnings or the day you become aware of an interruption of earnings.
There you go. Six keys steps in having an employee or a nanny. There are of course other items to consider that are not included above including taxable benefits and of course the time to actually administer what is required for the above. We help a number of our clients out with payroll acting in different capacities ranging from advise for special situations to a full-service where we run their payroll system.