North American Payroll: What Small Businesses Need to Know
In North America, managing payroll is one of the hectic tasks to do. Every step, from determining employee pay to adhering to complex tax laws, must be done precisely. For USA business owners, it is mandatory to know and understand American payroll to avoid major mistakes and to ensure employee satisfaction. 1. Payroll Basics in the U.S. and Canada While the U.S. and Canada share many business practices, payroll processes differ significantly. In the United States , employers must: Withhold federal and state income taxes Social Security and Medicare (FICA) contributions One should file tax returns (Form 941) and provide W-2 forms Employers in Canada are in charge of: Making contributions to the Employment Insurance (EI) and Canada Pension Plan (CPP) When appropriate, paying Employer Health Tax (EHT) Providing employees with T4 slips and submitting T2200 forms as required Respecting employment regulations at the federal and provincial levels 2. Typical Sm...