Payroll Legislation

In-House Canadian Payroll Processing

Posted by Wes Quintin | June 4, 2019

Here’s Why We Think In-House Payroll is a Best Practice

For me the benefits were significant. With my outsource provider I processed the entire payroll sent them the EFT and they printed or emailed all the reports. Essentially I was doing all the work and paying the outsourcer on average a large sum of money per payroll to send an EFT. I also was restricted on building pay codes and running a mid period payroll run.

Processing my pay in-house I can add a new pay code at any time, the time frame I have to send the EFT is two days greater as I do not have to transfer the funds to a third party prior to paying the employees. I can run a mid-period run at anytime and pay by either direct deposit or cheque.

I also process my own ROEs and can correct any issues on the ROE web as required, something I could not do with an “S” ROE.

Changing to an in-house payroll worked out so much better for us. It is important to note, that a professional payroll person will still need to have proper checks and balances in place as no system can account for human error.

Cavelle Heckley, CPM
Payroll Coordinator

In-House Payroll Processing, Keeping You in Control

In-House Payroll Professionals Take the WheelWe went from an outsourced payroll system to in-house. I much prefer an in-house system due to control. And I am a control freak…. Our informational demands are constantly changing and are very diverse (government funded).

Processing my payroll in-house gives me the flexibility to add, change, reallocate, almost “on the fly” in comparison to my experience in asking a 3rd party to explain, wait, and make these changes for me.

Heather Bilyea, CPM
Payroll Administrator

When a Canadian organization makes the decision to process its own payroll, it’s because they want better control over their payroll and processes.

There’s added peace of mind when you know your team is looking after one of your most important business tasks.

A recurring theme we’ve learned from the thousands of Canadian Payroll and Finance professionals we’ve met over the years is they’re self-proclaimed control freaks, and we respect that.

According to a survey of Canadian Payroll professionals, processing government (Federal or Provincial) remittances is one of the most important elements in their payroll administration 1.

When you’re processing pay for hundreds or thousands of employees across Canada, the question is, why would you trust the most important elements of your payroll administration to someone outside your organization?

Yes, you can take control of your Canadian Payroll processes. Here are 4 reasons why.

1(Source: CPA NPW 2018 Professional Research Survey, Question 15: Please indicate how important or unimportant each of the following elements related to payroll administration are to you as a payroll professional)

In-House Payroll Peace of Mind

In-House Payroll for Peace of MindI’ve processed payroll in-house for twenty years and have recently investigated outsourcing.

The benefits and cost savings of processing my pay in-house definitely exceed outsourcing. In-house processing provides the control, peace of mind and flexibility that is often required in the payroll world – from the ability to quickly make necessary system updates to processing off-cycle requests – in-house processing is the only way to go.

From the conversations I’ve had, outsourcing does not meet my needs.

Canadian Payroll Superhero
Payroll veteran for 25+ years

‘But don’t we outsource our Payroll to get more peace of mind or become more compliant?’

Here’s the thing, you can’t outsource risk. Whether you make a mistake or your payroll outsourcer makes a late remittance or deposit, your organization is still responsible to make sure deductions are remitted on time.

Payroll and Finance teams, Partners in Compliance

Think about all of the payments that you trust to your Finance team today.

At the top of the list are Regulatory Payments (i.e. GST, HST, Corporate Taxes, Workers’ Compensation and Employer Health Taxes).

Your remittance payments are important and your team will have the information they need to ensure they are paid accurately and on time; the same way they do with all regulatory payments.

When your team makes remittance payments you have control and audit trails of those payments.

Consider the cost of money over the course of just one year. Payroll often represents a significant portion of your organization’s costs.

Consider the effect this has on your cash flow and lost revenue from other areas.

As an example, these funds could be working for you earning interest income on purchasing inventory or other capital investments.

Are You Still Outsourcing your CRA Remittances?

All-In-One HRIS system for HR and Payroll

When processing your pay in-house, you have to be aware of the deadlines to reduce the risk of fines and penalties, the benefits however are financially greater. With in-house, you only have your time to consider when making the payment, and possibly bank charges for the payment– rather than worry about an outsourcer’s deadlines. CRA has enabled the online account payments through your own login on MyBusinessAccount and it is a one or two-day turnaround, just make sure you schedule the correct deadlines.

Dione Lockyer, CPM
Payroll and Benefits Lead

In a recent survey, almost half of all payroll professionals surveyed said they process their payroll using a third-party provider 2 (outsourcer), yet 75% perform remittance reconciliations 3.

Payroll professionals are already doing most of the heavy lifting when it comes to processing their payroll remittances, they’re leaving the task of payment up to a third party.

In the end, how does outsourcing remittances really benefit payroll professionals?

They’re already spending all that time preparing and double-checking those remittances, and then hoping that the outsourcer remits on time with the amount the payroll professional has deemed correct.

Remember what the CRA says about remittances through a third party service bureau,

‘If you use a service bureau or similar institution to remit your deductions, you are still responsible for making sure that the institution withholds your deductions and sends them to us on time.’

How an In-House Payroll System Makes the Remittance Process Easier

Are you in a rush to submit your remittances to a payroll outsourcer who needs it days in advance?

By outsourcing your remittances, you forego interest income on the amount of your payroll until your employees get paid.

This ties up cash that could be deployed elsewhere, all while receiving no commensurate reduction in liability.

Payroll outsourcing companies are earning hundreds of millions of dollars by holding onto your payroll dollars before your employees actually get paid.

But what else can you do to save money on your payroll processing costs and gain more time?

When using an in-house payroll system to remit to Service Canada and CRA, all that’s left to do after the heavy lifting of calculations and reconciliation is complete, simply make your payment by following steps as simple as paying a bill via online banking.

Let’s say you’ve reconciled your remittances and sent them over to the outsourcer for them to remit the amount due on your behalf.

Suddenly you realize that you need to make an adjustment because you missed a new employee that was supposed to be paid for that pay period.

With an outsourced payroll provider:
It’s too late to make a change and you’ll now have to wait until the next pay period to adjust.

With an in-house payroll provider:
You can run an off-cycle pay addressing the discrepancy, remitting the right amounts as long as the payment is made by the due date defined by CRA.

2(Source: CPA NPW 2018 Professional Research Survey, Question 6: Please indicate how your organization processes payroll)

3(Source: CPA NPW 2018 Professional Research Survey, Question 13.3: Again, when thinking about your time spent performing all payroll-related activities, please indicate payroll tasks that you perform in each activity category below. )

More Control Over Your Year-End Processes for Canadian Payroll

In-House Payroll Best Practices for Year-EndI have more flexibility with my in-house payroll system when it comes to T4s and Year-End functionality. I like that I am able to ensure the T4s are correct before they are processed through the system rather than being told I have to run my T4s on a certain date – even if I am not ready.

This way I know our T4s are correct and that our employees can feel confident they have the right information showing.

Mark Betcher, PCP
Manager, Pay & Benefits

Nicole Edmonds CPM, Payroll Manager at Sawridge Group of Companies moved from an outsourcer to an in-house payroll system a few years ago. She is relieved with the impact it has had on her year-end payroll processing.

T4 Trial Runs

She can do T4 trial runs any time of the year, which means Nicole can wait until September to do a test run.

Having the choice to do it after their peak season gives Nicole the control she needs to easily check to see if the summer information was accurately done before year end.

Tax Slips/Special Boxes

Nicole can make sure she feels comfortable about everything in the system, especially for new earnings that are going into new boxes. Her in-house payroll system even has tax slips for employees who have special boxes, such as the Box 71 Indian Employment. Having the option for Box 71 is important for the employees who work for employers on Reserve Land.

This makes Nicole’s life much easier when it comes to managing the payroll at each hotel for all employees.

CRA Remittances

Nicole also has the ability to balance the CRA remittances as a result of having an in-house payroll system.

This means that she doesn’t need to outsource anymore, she can manage her own programming, remittances, and deposits. Giving Nicole the control she needs to accurately and confidently track the amounts due and paid all on her own.

Now that all the payroll activity is collected, Nicole and her Payroll Team are able to compare the remittances that are supposed to be submitted to what was actually submitted.

These remittances inform Nicole if all the information in boxes (associated with each employee) balance with their T4 summary.

Avanti Makes In-House Payroll Processing Easy

 

We are a First Nations owned company, we have businesses in the First Nation, and the tax treatment for First Nations employees working on reserves is different—they need special T4s.

In all the years we worked our outsourced payroll provider, they never could get our T4s right. We had to do them all manually, every year we struggled with that.

With Avanti, we’ve never had a T4 issue!

Eresha Fernando, CPA
Chief Financial Officer

 

Avanti provides an easy to read, and compile, Receiver General and Québec Remittance report that is similar to the PD7A report, indicating how much is owing and when it is due.

Need a reminder of when the payments are due to Finance for processing? No problem! You can set up automated alerts and notifications in Avanti, so that you don’t risk forgetting to make a payment.

If you notice a deduction error before your remittances are due for payment, off-cycle pay runs in Avanti provide you with added peace of mind to make an adjustment for the current pay period.

Subscribe to Resources from Avanti

Never stop learning with the latest resources on HR Tech, Canadian payroll legislation, and more.

  • This field is for validation purposes and should be left unchanged.