Counting The Cost

Within the last year, the E-HIS has grown a lot, so much so that we needed to hire on employees rather than subcontractors. I got to be involved with a big part in this process and it made me realize how much learning there is at every stage of business growth.

The E-HIS journey has gone from solo-entrepreneur to family-run, to subcontractors and now employees. There are big differences between simply paying subcontractors and managing payroll for employees. Subcontractors are responsible for paying the tax on their income and can choose if they want to contribute to Employment Insurance and the Canadian Pension Plan.



Even before the first employee was hired there are lots of things that have to get done to be ready. This month's article will be sharing some of the things that you should factor in when getting ready for your first employee. I hope it will help you when you decide to hire someone to assist you in your practice/small business.

Steps To Take Prior to Hiring an Employee:

  1. Get a business number for the Canadian Revenue Agency (CRA) - this can be done online, fill out an RC1 form, which is a request for a business number. This can be faxed to a tax service office or tax center.  Another option is contacting the CRA directly at 1-800-959-5525.  When you contact them directly you can get a Business Number and request a payroll account at the same time.  When you have a business account you will have access to the CRA's My Business Account Online Portal and you can add services directly from there.
  2.  Open a Payroll Deductions Account with the CRA - there are different ways of registering - through the My Business Portal, by telephoning the CRA, or by filling out and faxing RC1 Part C.
  3. Set up an account with the Worker's Compensation Benefits Program (WCB).

Counting the Cost:

  1. Calculate the actual costs of hiring and check your finances:
    1. Find out the percentages that the employer is required to pay beyond the agreed-upon hourly wage or salary.
      • There is a payroll tax
      • Employment Insurance (E.I.) Employer portion
      • Canadian Pension Plan (C.P.P) Employer Portion
      • and vacation pay.
    2. As well, the employer is responsible for paying into the WCB program based on how much the employee is being paid annually and how many employees the company has.
  2. Legal Requirements:
    1. There are Federal Labour Standards - see the following website for more details.
    2. Each province and territory in Canada has employment standards that must be followed in their area.
    3. The company needs to have Employment Contracts that you get the employee to sign that outlines the job description, probationary period, wages, benefits, actions that would result in being fired, overtime stipulations etc.
    4. On acceptance of the job the employee would need to sign and agree to the terms and conditions of the job offer.
  3. Finding the Right Applicants and Interviewing:
    1. Be very clear on the job description - what skillset is needed to perform the job you need.
      • Before this even it is important to assess where you need the help most. What would make the biggest difference: administrative tasks, technical skills, salesperson, marketing? Evaluate what area would make the biggest impact in your business growth or even freeing up your time.
    2. Check to confirm they have the right qualifications.
    3. Check if they fit the 'vibe'. Company culture is important for the performance of your team. We find using personality assessments like '16 personalities' is a fun way to break the ice and discover a little bit about a new person. This helps us see how we can support them and help them mesh with the existing team.
    4. Set up clear expectations on performance, how to communicate needs, and how feedback is given and received. If there is one environment where people struggle, its when they are lost and feel under-supported. It's great to explore new territory and do new and daring things, but make sure your team feels connected while you grab that new dream.
    5. Look for candidates that have what you are missing. The best success story we have heard is --> hire everyone smarter than you as fast as possible! You don't have to know everything all the time, and you would be amazed at some of the obvious things you might have missed ;).
    6. Try to find candidates who have startup experience with small businesses - its helpful to have a "jack of all trades" type of person who is able to work autonomously and willing go beyond the stated job description because they know what it takes to get a small business off the ground.
    7. Ask friends, business contacts, or other similar small businesses that you know for recommendations for qualified applicants.
  4. Training and Onboarding the New Employee:
    1. Once you have hired your first employee, you must now spend time onboarding and training them.  To find your new hires' true potential you must take the time to train the employee to fit the job they were hired to do.  It is better to overtrain than undertrain.  Lay out clear work standards of what is expected and how to reach the required goals of the company.

I remember how overwhelmed I felt when I ran the first payroll and really saw the end cost for our first employees. But down the road, it doesn't seem as overwhelming and once you are registered with all the right programs it's easier to add more people to your team.

Works Cited:

Calculating Cost

The True Cost of Hiring an Employee in 2021


Joy Watson