What You Need To Know About Payroll in 2021 (Regulations, Deadlines, and Selecting the Right Provider)

Given the events that took place in 2020 I’m sure you can agree with us when we say that this past year was all about adapting.

As we leave 2020 behind us and head into 2021, let’s pause for an update on what you can expect from payroll in the new year and give you a behind-the-scenes view into how 2020 has affected our operations here at PaymentEvolution.   

Below, you’ll find a table of contents, feel free to click ahead into the topics that interest you the most.

Table of Contents

We’ve also covered this topic on our Youtube Live Stream. Check it out below, and if you prefer audio only, discover The PayEvo Podcast.

How the Coronavirus Affected Our Payroll Operations

Sadly when COVID-19 hit, layoffs followed. So naturally, we got a lot of questions and inquiries around Records of Employment (ROEs).

In fact, Andrea – our Director of Customer Success – provided extra training and asked her team to do overtime if necessary to refresh everything they needed to know about ROEs.  

As the Canadian government rolled out subsidy programs for businesses and employees affected by COVID, we received a ton of questions related to the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Response Benefit (CERB). 

Other popular topics brought to our Customer Success team included:

You can imagine our phone lines were pretty busy.  

On the developer side of things here at PaymentEvolution, our Development team was hard at work, often working overtime and during the weekends in order to introduce new calculation and reporting functionalities within our payroll software.

And, get this – we were able to roll out an entire application to address CERB & CEWS within just five days. How wild is that?

How to Select the Right Payroll Solution Provider in 2021

If you already have a payroll solution and you’re looking to make a switch (or maybe you’re thinking about making your first-ever payroll purchase,) here are some tips we have for you when selecting the right provider for your needs.

World Class Customer Service!

Customer support is everything. Why? Well, two reasons.

1. Payroll Providers are the Experts

Keeping up-to-date with tax tables, legislations, and payroll rules is a full-time job in itself. Keep in mind, we said it’s a job – but it’s not your job.   

A solid payroll provider will proactively align their software with any legislative changes that will affect you.

They should also be able to answer any technical payroll questions you might have. At PaymentEvolution, we know it’s vital to our customers that help is just a phone call away.

For example, does your payroll provider have a designated Certified Payroll Specialist on staff? This expertise is critical to supporting hyper-specialized situations, especially in a pinch.  

When you give your payroll software provider a call, you want to know that they’ll have an expert on staff who can answer your hardest questions.

2. Spare Yourself Time and Stress

Running payroll is complicated, especially when you consider the calculations that go behind it.  At some point, you’re bound to get stuck. And, a rut can cost you hours of productivity.

Imagine trying to figure out how to calculate timesheets but the numbers don’t seem to add up. So you spend the next hour clicking around and looking up YouTube tutorials in hopes you’ll make it work.

Have you ever been caught in a rut like that? Well, it doesn’t have to be that way.

When you’re selecting a payroll provider you want to make sure they can guarantee you excellent customer service.  

That way, in the event you catch yourself in a rut, you can make a quick phone call and have it all figured out in no time.

Make Sure the Reviews Are Stellar!

This probably goes without saying but, you also want to make sure that the payroll solution you choose has great online reviews.

We’d recommend you check out the following websites for reviews:

You can also use software selection and comparison tools such as Olive.app, TrustRadius and Technology Evaluation Centers to help you make a more informed decision.

Figure Out Your “Must Haves”

Andrea, our Director of Customer Success, shared a tip that you might find helpful.

She recommends you make a simple T chart. Label one side of the chart Must-Haves and the other, Not Needed.

If there’s a feature that you’re so-so about, you’ll want to add that in the Not Needed column.

Once you’re done creating the chart, go ahead and start filling the chart in with everything you’d want in a payroll solution along with features you don’t really need.

This will help to make your payroll shopping experience much more efficient.  

Tax Saving Tip: Writing Off Work-From-Home Expenses

According to Stanford university; about 42 percent of companies are now working from home (WFH) full-time.

With that many people WFH, can you imagine the electricity and Internet consumption employees are facing nowadays?

We have some great news… you can write off a lot of your work from home expenses on your personal taxes.

You’re only writing off your work-related portion of your expenses, but every little bit helps. Keep in mind a tax write off doesn’t mean you get the expense refunded. It just means you won’t be taxed on the income spent on those items.

If you’re interested in writing off your electricity and internet consumption from your taxes, you’ll need to fill out the T2200 form from the CRA. We’ve covered this topic in a dedicated post on Deducting Home Office Expenses During COVID. You can find the T2200 form right here.

Generally speaking, when it comes to payroll rules and regulations in 2021, most of it will be staying the same.  Although, there are a couple of things you should keep in mind.

1. CPP and Employment Insurance Will Change

Just as they do every year, the Income Tax rates change, as well as deductions for the Canada Pension Plan and Employment Insurance.

If you’re using a regular Excel spreadsheet to run payroll, you are at the greatest risk. A great payroll solution will update those details for you automatically. It’s also good to share this information with your staff in advance of January. If you don’t, you’re likely to receive a number of Why am I making less (or more) this year? questions.

CRA’s employee and employer contribution rates for 2021 will be 5.45% (up from 5.25% in 2020), and the self-employed contribution rate will be 10.9% (up from 10.5% in 2020). The contribution rate increase is because the CPP enhancement is still being implemented.

Payroll Dates

Another thing to keep in mind are payroll dates. Remember, payroll dates are calculated based on payment dates and not calendar dates.

For example, if you say that your employees worked between December 15th and the 31st but you pay them on January 3rd, that payment will be a 2021 payment and will go into your 2021 tax forms.

Awareness about how this works helps avoid confustion.

TFSA and RRSP

TFSA and RRSP deadlines are coming up. This is the perfect time to remind your employees and colleagues when the deadlines are.

The TFSA deadline is December 31st and the RRSP deadline is March 1st.

Resources and Advice For Small Businesses

2020 has been turbulent for many, so we thought we’d share with you some payroll-related resources, tips, and advice so that you’re prepared no matter what comes down the road.

1. Canadian Payroll Association

If you have any payroll staff on your team, it’s important you get them a membership to the Canadian Payroll Association (CPA).

Why? Well, there are a number of reasons but perhaps the best reason was summarized by Andrea, our Director of Customer Success. She put it simply, “When I call the CRA, I’ll get a different answer every time. When I call the CPA I’ll get the right answer.”

Use Your Payroll Service Provider As A Resource

We’ve repeated this already but can’t emphasize enough… Your payroll service provider is a resource for you. Legislation and tax tables can be complicated. You have your own business to run and don’t need to figure it out all by yourself.

Hire a Bookkeeper or Accountant

If managing your own payroll is a little too much for you, consider hiring a Certified Professional Accountant or a Bookkeeper to take that off your hands.

Here are some reasons why this might be a good option for you:

  • Making a payroll mistake can cost you thousands. When you get a professional to run payroll for you, you could be saving yourself from painful penalties and fees.
  • Running payroll can be monotonous and time-consuming. When you outsource it to a professional, you get time back in your day–time you should be spending on your business.

Conclusion

If there’s one thing we here learned at PaymentEvolution in 2020, it’s that you always need to be prepared for unprecedented times, even if that means preparing a forgettable back-end office function like payroll.

We’d like to wish you all the best in the new year ahead!