How to Prepare for Hiring Your First Employee

Hiring your first employee changes the business.

You are no longer only selling, delivering, invoicing, and managing customers. You are also responsible for payroll, employment records, workplace rules, supervision, training, privacy, safety, and the legal difference between an employee and a contractor.

Before you make the offer, prepare the basics so the first hire starts with clarity instead of confusion.

Decide Whether You Need an Employee

Start with the work, not the job title.

An employee usually makes sense when the business needs ongoing work under your direction, with set expectations, tools, schedule, training, supervision, and integration into the business. A contractor may make sense for independent project work, specialized advice, or short-term support where the person controls how the work is done.

The CRA says employment status affects CPP, EI, and income tax withholding obligations. The facts of the working relationship matter, not just the label in the contract.

Do not call someone a contractor just because payroll feels inconvenient. If the relationship looks like employment, misclassification can create tax, employment standards, and workers’ compensation problems.

Define the Role Before You Recruit

A vague role creates vague performance.

Write down the work the person will do, the expected hours, location, pay range, supervision, tools, training, start date, reporting line, and what good performance looks like in the first 30 to 90 days.

Also decide whether the role is full-time, part-time, temporary, seasonal, casual, remote, hybrid, or on-site. Employment standards rules can vary by province, territory, industry, and employee type, so the role structure affects more than scheduling.

You do not need a perfect corporate job description. You do need enough clarity to hire for the actual work.

Check Employment Standards

Most employment rules are provincial or territorial, unless the business is federally regulated.

Employment standards can cover minimum wage, hours of work, overtime, vacation, public holidays, leaves, termination notice, deductions from pay, pay statements, record keeping, and other conditions of employment.

Canada.ca explains that federal labour standards apply to employees working in federally regulated businesses and industries. If your business is not federally regulated, check the employment standards for the province or territory where the employee works.

Do this before promising pay, hours, vacation, overtime arrangements, or termination terms. A written offer cannot remove minimum employment standards.

Set Up a CRA Payroll Account

If you are hiring an employee, you generally need a payroll program account.

The CRA says new employers have to register for a payroll account before the first remittance due date. Payroll remittances include amounts deducted from employee pay, such as income tax, CPP contributions, and EI premiums, plus the employer’s share where applicable.

If you already have a CRA business number, payroll is added as a program account. If you do not have a business number yet, you may need to register for one.

Do not wait until after the first paycheque to learn how remittances work. Late or incorrect payroll can create penalties, interest, and avoidable stress.

Plan How You Will Run Payroll

Payroll is more than sending money on payday.

You need to calculate gross pay, statutory deductions, employer contributions, vacation pay, benefits, taxable benefits where relevant, reimbursements, remittance amounts, pay periods, pay statements, and year-end slips.

The CRA provides the Payroll Deductions Online Calculator for federal, provincial, and territorial payroll deductions, except Quebec. Quebec payroll has separate Revenu Quebec requirements.

Decide whether payroll will be handled by software, a bookkeeper, an accountant, a payroll provider, or you. If you handle it yourself, build a recurring calendar for paydays, remittances, filings, and year-end slips.

Collect the Right Employee Information

Before the first payment, collect the information needed for payroll and employment records.

The CRA says employers should get the employee’s social insurance number, determine the province of employment, and get completed federal and provincial or territorial TD1 forms before paying an employee.

Employment and Social Development Canada says employers should request each new employee’s SIN within three days after the day employment begins. Employees with a SIN beginning with 9 are temporary workers, and the employer must make sure they are authorized to work in Canada and that the immigration document has not expired.

Treat SINs and payroll information as confidential. Store them securely and limit access.

Prepare the Offer Letter or Employment Agreement

Put the basic terms in writing before the employee starts.

The document should usually cover job title, start date, pay, pay frequency, hours, work location, reporting relationship, probation or introductory period if used, vacation, benefits if any, confidentiality, equipment, policies, termination terms, and any conditions of employment.

Some terms can create legal risk if they are poorly written, especially termination, restrictive covenants, commission plans, bonuses, intellectual property, remote work, and confidentiality.

If you are unsure, have an employment lawyer review the agreement before using it. It is easier to fix the document before the offer is accepted.

Prepare Workplace Policies

Small employers do not need a giant employee handbook on day one.

You do need clear rules for the things that affect the role. That may include attendance, scheduling, time tracking, breaks, overtime approval, expenses, confidentiality, use of business equipment, remote work, workplace conduct, health and safety, privacy, customer information, social media, and how problems are reported.

Policies should match the business you actually run. Do not copy a large-company handbook if you cannot follow it.

The goal is to make expectations clear enough that both sides know how work should happen.

Check Workers’ Compensation and Safety Duties

Hiring often triggers workers’ compensation and occupational health and safety responsibilities.

Workers’ compensation requirements are handled by provincial and territorial boards. Registration requirements can depend on province, industry, business activity, worker type, and whether the business has employees or contractors.

For example, WorkSafeBC says businesses that hire workers in B.C. are required to register for WorkSafeBC insurance coverage. Ontario’s WSIB says most Ontario businesses with employees must register, and many must do so within 10 calendar days of hiring their first employee.

Check the board for the province or territory where the employee works before the start date.

Think About Privacy and Employee Records

Hiring creates sensitive records.

You may collect SINs, addresses, banking details, tax forms, emergency contacts, medical notes, performance records, discipline records, accommodation requests, background checks, and identification documents.

Privacy rules can vary by province, sector, and whether the employer is federally regulated. The Office of the Privacy Commissioner of Canada says PIPEDA sets rules for how private-sector organizations collect, use, and disclose personal information in the course of commercial activities.

Collect only what you need, explain why you need it, store it securely, limit access, and decide how long records will be kept.

Prepare Tools, Access, and Training

The first week should not be improvised.

Prepare the employee’s workspace, software accounts, email, devices, uniforms, keys, passwords, payroll profile, training schedule, safety orientation, customer instructions, and any required system permissions.

Use named user accounts instead of shared logins. Give access based on the role, not convenience. Remove access quickly if the employee leaves.

Also decide who trains the employee and what they should know by the end of the first day, first week, and first month.

Budget Beyond the Wage

The wage is only part of the cost.

Depending on the role and jurisdiction, the business may also need employer CPP contributions, EI premiums, workers’ compensation premiums, vacation pay, statutory holiday pay, benefits, training time, equipment, software, uniforms, supervision time, recruiting costs, payroll service fees, and accounting support.

If the employee’s work is directly tied to sales or billable hours, be careful about assuming full productivity from day one. New employees need onboarding, mistakes need supervision, and schedules can change.

Plan the cash flow before making the offer.

Know When to Get Help

Your first employee is a good time to ask for targeted support.

A bookkeeper or payroll provider can help set up payroll and remittance routines. An accountant can advise on payroll accounts, deductions, benefits, and owner-manager pay questions. An employment lawyer can review the offer letter. An HR consultant can help with policies and onboarding. An insurance broker can review employer-related coverage.

If you need Canadian service providers, you can browse the Tech Help Canada Business Directory by province, city, industry, and category as a starting point.

Before the Start Date

Before hiring your first employee, confirm the worker status, job scope, employment standards, payroll account, payroll process, SIN and TD1 collection, written offer, workers’ compensation registration, safety duties, privacy practices, tools, training, and total employment cost.

Hiring well is not only about finding the right person. It is about building enough structure that the person can succeed once they arrive.

Sources

• https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/determine-relationship-employer-payer.html
• https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4110/employee-self-employed.html
• https://www.canada.ca/en/services/jobs/workplace/federal-labour-standards.html
• https://www.canada.ca/en/services/jobs/workplace/federally-regulated-industries.html
• https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/open-manage-payroll-account.html
• https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/set-up-new-employee.html
• https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/ei-employers-sin.html
• https://www.canada.ca/payroll-calculate-deductions
• https://www.worksafebc.com/en/insurance/apply-for-coverage
• https://www.wsib.ca/en/businesses/registration-and-coverage/do-you-need-register-us
• https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/pipeda_brief