This article is based on research for our recent eGuide, A small business guide to making your first hires.
The decision to hire is a huge step for any business owner. And when it comes to small businesses, the stakes only get higher. According to a recent study by the Conference Board of Canada, the average time needed to fill a role is 56 days, with the average cost to hire a new employee coming in at $6,227. That’s a lot of time and money for a small business owner, which means you need to get it right the first time.
Once you’ve decided you’re ready to hire, it’s important to understand all that responsibilities and requirements that come along with being an employer.
Here is a primer on what you need to know before hiring your first employee.
Understanding your legal requirements
To hire an employee in Canada, you need to:
- Register for a business number (BN) and a payroll deduction program account (RP) with the Canada Revenue Agency (you can learn more about this by listening to the CRA’s payroll podcast).
- Acquaint yourself with federal and provincial labour standards around work hours, wages, vacation, and more. It should go without saying that you also need to meet these standards.
- Understand how to deduct Canada Pension Plan contributions, employment insurance premiums, and income tax. Check out the CRA’s video series for more information about tax rules and tools.
Once you make a hire, you must:
- Get your employees’ social insurance number (SIN) within three days of their start day. You’ll also want to ensure that the SIN is valid by contacting Service Canada.
- Have each employee fill out a TD1 form to keep on record.
- Issue a T4 slip for each employee annually.
- Register for workplace health and safety insurance. Requirements for insurance differ by province; you can learn more about what regulations apply to you through the Canada Business Network.
Setting competitive salaries
What you will pay your employee(s) depends on a few things:
- Minimum wage as dictated by your province.
- Industry standards for the position and your industry. Payscale is a great resource for this kind of information.
- The tasks, required skills, education, and specialization of the role. The more demanding a role is, the higher the salary may have to be.
As a small business looking to keep costs down, you’ll likely want to pair a reasonable salary level with other workplace perks that will differentiate you as an employer without depleting your budget. And on that note, you’ll want to consider:
Creating an employee benefits package
When it comes to competing with larger companies for top talent, employee benefit packages are becoming increasingly common among smaller businesses. After all, benefits help to attract and retain top performers, which will in turn help to grow your business.
A basic benefits plan includes health insurance paired with a few additional perks. Luckily, more and more insurance providers (like Sun Life or Manulife) are tailoring plans specifically to companies with less than 50 employees. Plus, many plans allow you to build on your package as your business grows. You can also work with a small business benefits broker to find a plan that fits your needs and budget.
To determine what kind of benefits package to offer:
- Start at the source: survey your existing team about what benefits appeal to them. The easiest way to do this is to have them rank a list of benefits in terms of desirability.
- Think about the future (and future recruitment plans). Looking closer at demographics will give you a better sense of what you should be offering. It makes sense, for example, to look at what the millennials and Gen Z age groups are looking for in a benefits package, considering that they’re expected to comprise 50 per cent of the global workforce by 2020.
There you have it; a quick overview of some of the major things to consider before hiring your first employee.
Remember: get our free eGuide, A small business guide to making your first hires, for a step-by-step guide to recruiting, screening, hiring, and onboarding your next superstar employee.