How to Set Up Payroll Correctly from Day One (And Avoid a Year-End Headache)

Once you’ve chosen your payroll platform — whether it’s Wagepoint, QuickBooks, or another — the real work begins: setting it up right.
This is where small mistakes quietly snowball into year-end chaos. Let’s walk through what to do (and what to avoid) when you’re launching payroll for the first time.

1. Start with the Legal Foundations

Before you even touch software, make sure the business has a CRA Payroll Account (RP) number.
This number links all deductions, remittances, and T4s to your business. Without it, the CRA has no idea who’s paying who — and that’s a problem.

If you’re incorporated, it’s tied to your BN (Business Number).
If you’re a sole proprietor, you’ll still need a payroll account even if you’re just paying one employee.

2. Enter the Right Start Dates and Pay Periods

This one’s easy to overlook. If your first pay is October 15, don’t set the pay period to start October 1 unless you’re actually covering the full two weeks.
The CRA expects your deductions and T4 earnings to match those pay periods — and once you submit a pay run, you can’t easily fix a wrong start date later.

Pro tip: In Wagepoint, always double-check “Pay Period Start” and “Pay Date” before approving your first run.

3. Verify Employee Information (Down to the Letter)

Names, SINs, and addresses on T4s must match CRA records exactly.
If “Sarah” is spelled “Sara” or the SIN has one wrong digit, it’ll flag your submission at year-end. Always collect a signed TD1 form for federal and provincial tax credits before running payroll.

4. Set Up Pay Types and Deductions Properly

Whether you’re paying hourly, salary, or contract, each has its own rules.
In Wagepoint or QuickBooks Payroll, create clear categories like:

• Regular Salary
• Overtime
• Vacation Pay (4% or 6%)
• Reimbursements (non-taxable)

Avoid lumping everything into “other earnings” — it’ll make T4s a nightmare to reconcile.

5. Run a Test Payroll

Before you officially send anything to the CRA, run a dummy pay.
Most platforms let you preview deductions, CPP, EI, and net pay without actually submitting.
It’s worth catching errors now, rather than trying to fix remittance mismatches later.

6. Don’t Forget About Record of Employment (ROE) Access

If your software doesn’t automatically file ROEs, you’ll need an ROE Web account with Service Canada.
This comes up anytime an employee leaves or changes status — and it’s often forgotten until it’s urgent.

Final Thought

Good payroll setup is like good bookkeeping — done right once, it saves hours later.
When we onboard clients to Wagepoint at Castle Bookkeeping, we verify every detail upfront: CRA account, pay frequencies, T4 matching, and deduction settings.
That’s how you avoid the frantic “T4 corrections” emails every February.

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