One of your most important duties as a restaurant owner is ensuring your staff gets paid. However, managing your payroll and running an active restaurant at the same time can get complicated in a hurry.
Keep reading for basic tips on how to pay your employees as a restaurant owner in Canada.
Do Things By the Books
From the jump, it’s important to ensure that you always do things by the book. Especially when it comes to paying your team members. Under-the-table payments, handshake agreements, and similar practices may still exist in certain parts of the restaurant industry, but they pose serious risks for everyone involved. They’re also often illegal.
If you’re unsure about the rules or just want to verify that you’re doing things the right way, check out Ontario’s Employment Standards Self Service Tool. This resource gives you a clear overview of your obligations as a restaurant owner.
Opening a restaurant? Read these other advice-filled blog posts next.
- Pros & Cons of Opening a Restaurant in Downtown Toronto
- How Much Does it Cost to Open a Restaurant?
- How Long Does it Take to Build a Business From the Ground Up?
How to Set up a Payroll Account
First, you’ll need to set up a payroll account with the Canada Revenue Agency (CRA) to track your remittances. It’s also where you’ll file employee T4S at the end of each year. Opening a payroll account is something you’re legally required to do as an employer in Canada. While it may sound complicated, the process is actually fairly easy and can be done online.
After opening an account, you’ll receive important identifiers (reference number and business number) from the CRA if you don’t yet have them.
Collecting Employee Information
When you hire and onboard a new employee, you’ll need to collect certain information from them to set up their payroll. Specifically, you will need to have them fill out various tax documents from both the Federal and Provincial governments.
Employers in Ontario must have employees fill out these two forms:
- TD1 Personal Tax Credits Return (Federal)
- TD1ON Ontario Personal Tax Credits Return (Provincial)
Setting Wages & Salary
When you hire someone, you need to decide what you will pay them. To avoid confusion or potential infractions, it’s a good idea to have an employee’s pay scale in writing.
Determining wages and salaries is not always easy, especially in today’s economic landscape. However, it’s important to keep in mind that compensation can directly impact employee retention. Costs of living (especially in markets like Toronto) continue to increase each year, and restaurant employees in particular are really feeling the impact. When deciding what to offer employees in terms of pay and benefits, be competitive.
Decide on a Pay Period
Next, you’ll need to decide when your employees will get paid. As an employer in Ontario, you must follow a specific pay period and ensure all employees are paid their due (including overtime) before or on each designated payday. Vacation pay is excluded from this schedule and can be paid later on (with regulations).
Most restaurants follow weekly (every week) or bi-weekly (every two weeks) pay periods based on specific days of the week. Others set paydays based on dates, such as the first and fifteenth of every month. You can decide which works best for your business as long as you follow the schedule consistently.
Looking for complementary restaurant real estate resources? Check out these other resources from our blog – on the house!
- How Restaurant Real Estate is Evolving
- Restaurant Sales: What’s on the Table During Negotiations?
- Key Terms in Restaurant Real Estate You Should Know
Payment Methods & Proof of Payment
As a restaurant owner, you can pay your employees in a variety of ways, including cash, cheque, direct deposit, or by electronic payment transfers (e-transfer). That said, you must meet certain requirements based on which method of payment you use.
Paying By Cash or Cheque
You must physically pay the employee at the workplace or another location confirmed in writing.
Paying By Direct Deposit
Wages may only be paid into a bank account under the employee’s name.
Creating Wage Statements
Finally, you must provide all employees with accurate wage statements for each pay period. Like payment, these statements must be made available to employees before or on payday.
Wage statements may be on paper or provided electronically as long as they are separate from a cheque. They must also outline essential details such as:
- Dates of the pay period
- Wage rate/salary (if applicable)
- Gross wages amount and calculation breakdown
- Deductions
- Net wages
Launch a Successful Restaurant Venture
If you’re looking to open a restaurant, you’ll want a professional restaurant real estate expert in your corner. That’s where we come in – Carve Real Estate. We know the unique ins and outs of commercial real estate and Canada’s restaurant industry.
Not only can we help you find the perfect spot to bring your dreams to fruition, but we’ll also serve as your long-term advisor on all things restaurant-related, including financing.
Have more questions about restaurant ownership? We can help! Send us an email at ryan@carverealestate.com or give us a ring at 416-618-0054 to get started.
