The new year brings fresh opportunities—but before you get too deep into 2025, there are some critical payroll tasks your startup needs to check off the list. Q1 is all about wrapping up the previous year, staying compliant, and setting up payroll for a smooth year ahead. Here’s your essential payroll to-do list to start the year strong.
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Issue T4s and File Payroll Reports
If your startup has employees, you’re typically required to issue T4 slips by February 28 to report their earnings and deductions from the previous year. These must also be filed with the CRA. Here’s what to check:
Are all earnings and deductions correctly reported? This includes salaries, bonuses, and taxable benefits.
Have you reconciled payroll records to ensure accuracy? Double-check against your payroll reports to avoid discrepancies.
If you have employees with temporary work permits (SIN numbers beginning with a 9), ensure that their SIN number has not changed.
Did you file on time? Late T4 filings can result in penalties, so don’t push this to the last minute.
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New Year, New Tax Forms
At the start of each year, employees should complete updated TD1 tax forms (both federal and provincial) if their situation has changed. If they’ve moved, had a major life event (marriage, dependents, etc.), or want to adjust their withholdings, now’s the time to update their records.
Pro tip: Ensure all employee addresses are up to date—this avoids issues when issuing T4s and other important documents.
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Check and Carry Over Vacation Balances
Under employment standards regulations, employees may be entitled to carry over unused vacation days—but only until June 30 in many provinces. If vacation isn’t taken by then, employers may need to pay it out.
What to do now?
- Review unused vacation balances from 2024.
- Confirm your company’s vacation policy aligns with local regulations.
- Remind employees to schedule vacation time if needed.
Not managing vacation properly can lead to compliance issues and unexpected liabilities down the road—stay ahead of it now!
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RRSP Contributions Deadline: February 28
Employees (and founders) looking to maximize their Registered Retirement Savings Plan (RRSP) contributions for the 2024 tax year must contribute by February 28, 2025. Some startups offer RRSP matching programs as an employee perk—if that’s you, make sure all contributions for the prior year are processed on time.
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Review Payroll Processes for the New Year
Q1 is also the best time to audit and optimize your payroll setup for the year ahead:
- Confirm salary changes, bonuses, and deductions—ensure everything is updated in your payroll system.
- Review compliance with new payroll regulations—payroll laws can change, so verify that your startup is meeting all federal and provincial requirements.
- Evaluate your payroll provider—is your current system working efficiently, or is it time to switch to something better? (Hint: If you’re not using Humi for payroll, we should talk!)
Final Thoughts: Stay Ahead of Payroll Each Year
Payroll mistakes can be costly—both in penalties and employee trust. By tackling these key tasks now, your startup will be in compliance, financially organized, and ready for growth in 2025.
Need help keeping payroll smooth and stress-free? Element CPA can take care of it for you! Let’s chat about setting up a system that keeps your startup running like clockwork.
