Lighthouses, lobsters and kilts, "Oh my!"
If you find yourself among the lucky ducks that live and work in Nova Scotia, perhaps you’d also like to follow their yellow brick road to becoming a small business owner.
What better place to do that than in their capital city, Halifax? With a population of 354,100 and an average unemployment rate of 5.6%, there is no shortage of valuable, hard-working individuals who will eagerly help you make a go of it. There's also a healthy population of wild blueberries every August.
Need more reasons to start a business in this city of friendly Maritimers? How about the fact that there is no payroll tax to be paid to the provincial government? Or that they have a 50% 5-year survival rate for small business in most sectors? Still not sold on it? Try this: The number of self-employed individuals, who represent a large portion of the overall employment in the province, is 56,700 (1 out of every 6 people).
Let’s say you’ve decided to start a business in Halifax, Nova Scotia. Here’s all the information you need to keep your business payroll compliant.
Setting up Your Payroll in Halifax, Nova Scotia
As a small business owner, you need to complete the following steps, properly and in order, to be payroll compliant in Halifax, Nova Scotia:
- Register your business.
- Deduct the proper payroll tax amounts.
- Follow the reporting requirements and payment schedules.
The first step is to register the name of your business (if you are doing business under any name other than your own) with the Registry of Joint Stocks. The current fee for registering your business is $68.55 and you will need to renew your license each year (11 months from the day it was issued). When you visit this site, you will also find many helpful small business resources.
After you’ve registered your business name, the next step is to apply for a business number (BN) with the Canada Revenue Agency (CRA). This is the number that identifies your business for federal, provincial and municipal tax purposes.
One of the sure things in life is taxes. In the case of small business, there are both employer and employee taxes that apply.
Although there’s no provincial payroll tax in Nova Scotia, you're still responsible for paying federal payroll taxes (source deductions), including:
- Canada Pension Plan (CPP) — This must be deducted from all eligible employees’ pensionable earnings and then you, as an employer, must match the amount of that contribution. Each year, the CRA determines the maximum pensionable earnings, the year’s basic exemption amount and the contribution rate. For more details, please refer to the CPP contribution rates, maximums and exemptions chart.
- Employment insurance (EI) — This must be deducted from all employees’ insurable earnings and then you, as an employer, must pay 1.4 times the amount of the employee contributions.
- Income tax — Both federal and provincial income tax (simply referred to as “income tax”) is to be deducted from all employees’ wages. There is no age limit on income tax deductions or employer contribution required.
One of the best tools to help with calculating all of these taxes is the CRA payroll deduction online calculator (PDOC). For manual calculations, refer to the CRA payroll deductions tables. Or make your life even easier, by using simple, fast and friendly payroll software like Wagepoint that automatically calculate these deductions for you.
Paperwork and processes, everyone loves them. Okay, you don’t have to “love” them, but acceptance can go a long way. As an employer, you are required to:
- Keep a paper trail — Retain records and books such as journals, financial statements, cancelled cheques and other items for a minimum of six (6) years.
- File tax returns on an annual basis — If you have employees, year-end tax forms (T4s, T4As, etc.) must be filed no later than the last day of February, following the calendar year to which the slips apply.
- Remit any amounts owing — If you are a new business, payroll taxes (CPP, EI and income tax) must be filed by the 15th of the month following the date of the payment to the employees.
Well, there you have it — the foundation for starting a great small business in Nova Scotia. Good luck and remember, there’s no place like Halifax to call home! May the entrepreneurial spirit be with you — along with a free 30-day trial of Wagepoint.
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