A New Veterinary Clinic Owner’s Guide to Opening Payroll and Tax Accounts

Opening Payroll and Tax Accounts for Your New Veterinary Clinic in Canada

You’ve opened your veterinary clinic. Between ordering equipment, hiring staff, and caring for your first patients, there’s a lot on your plate. One task that might seem less urgent but is actually critical is setting up your payroll and tax accounts with the Canada Revenue Agency (CRA).

Getting this right from the start helps you avoid costly penalties and lets you focus on growing your practice and serving your community. Canada’s veterinary sector is thriving, with over 4,300 accredited facilities and 16,000 active veterinarians contributing $16.9 billion to the economy. As you join this growing industry, managing your payroll properly sets a strong foundation for your success.

Understanding Your CRA Payroll Account

What Is a Payroll Account?

A CRA payroll account is required for you to remit payroll deductions and fulfill your obligations as an employer in Canada. This account has a unique 15-character number made up of your Business Number (BN), a two-letter program code (“RP” for payroll), and a four-digit reference number.

You need this account because as an employer, you’re required to withhold certain amounts from your employees’ pay and send them to the CRA. This applies whether you’re hiring veterinarians, technicians, or receptionists. You’ll need a payroll account too if you’re incorporated and paying yourself salary or wages, even if you’re the only employee.

When to Register

Timing matters. You must open your payroll account before the first remittance due date, which is typically the 15th day of the month following when you first pay renumeration or make deductions. So if you hire your first employee and pay them in March, you’ll need to remit those deductions by April 15th.

Waiting too long can result in penalties, even if you eventually pay everything you owe. It’s one of those administrative tasks worth doing early.

How to Register for a CRA Payroll Account

Getting Your Business Number

Before you can open a payroll account, you need a Business Number. This nine-digit number is your business’s main identifier with the federal government. If you already registered for a GST/HST account, you already have one.

The Registration Process

The CRA offers several ways to register:

Online registration is the fastest method. You can use the Business Registration Online system if you have a valid Social Insurance Number and have filed a tax return with the CRA.
Phone registration is available by calling 1-800-959-5525 with your information ready.
Mail or fax works too. You can also mail or fax Form RC1 to your nearest tax service office.

Information You’ll Need

Gather these details before you start:

Your business’s legal name and operating address
Type of legal entity (sole proprietorship, corporation, partnership)
The date your employees received their first wages
Your pay period type (weekly, bi-weekly, semi-monthly, or monthly)
Total number of employees
Your Social Insurance Number and date of birth

Having this information ready makes the process straightforward.

Source Deductions: What You Need to Withhold

Source deductions are amounts you must take from your employees’ pay and send to the CRA. You collect these amounts from employees and send them to the government on their behalf.

The Three Main Deductions

Canada Pension Plan (CPP) contributions help fund retirement benefits for your employees. Both you and your employees contribute to this program.

Employment Insurance (EI) premiums provide temporary income support if your employees lose their job, get sick, or take parental leave, with contributions from both employer and employee.

Income tax is based on each employee’s earnings and personal tax credits. The amount you withhold depends on the TD1 forms your employees complete when they start working for you.

What Counts as Payroll

Source deductions apply to more than just regular wages. You also need to make deductions from:

Bonuses and tips
Vacation pay
Commissions
Taxable benefits (like personal use of a company vehicle)
Pay in lieu of termination notice

For veterinary practices, remember that any perks you offer staff, such as discounted veterinary services for their own pets, might be considered taxable benefits.

Collecting Employee Forms

When you hire someone, have them complete federal and provincial TD1 forms. These Personal Tax Credits Return forms tell you how much income tax to deduct. Keep these forms in your files but don’t send them to the CRA.

Remittance Schedules and Staying on Track

How often you remit depends on your Average Monthly Withholding Amount (AMWA). The CRA calculates this and assigns you to a remitter category:

Quarterly remitters: AMWA under $3,000, with a perfect compliance record
Regular remitters: AMWA below $25,000
Accelerated remitters: AMWA of $25,000 or more

Most new veterinary clinics start as regular remitters, meaning you’ll send payments monthly by the 15th of the following month.

The CRA reviews your remitter type annually, so as your practice grows and your payroll increases, you might move to a different schedule.

The Real Cost of Payroll Penalties

Payroll errors come with real financial consequences, especially in your first year when cash flow is tight.

Late Remittance Penalties

According to the CRA’s Employers’ Guide, penalties increase based on how late you are:

1 to 3 days late: 3% of the amount due
4 to 5 days late: 5% of the amount due
6 to 7 days late: 7% of the amount due
More than 7 days late: 10% of the amount due

If the CRA has already issued you a demand to remit, or if you’ve been late within the last 12 months, you could face an additional 10% penalty.

Failure to Deduct Penalties

If you don’t withhold the required amounts in the first place, the penalty is 10% of what you should have deducted. Make the same mistake again in the same calendar year, and that jumps to 20%.

Daily Compound Interest

Beyond penalties, the CRA charges interest on any overdue amount. This interest compounds daily and applies to both the unpaid deductions and any penalties you’ve accumulated. The rate changes quarterly and is published by the CRA.

What This Means for Your Practice

For context, many veterinary practices plan for non-veterinarian payroll to make up roughly 22–24% of their total operating expenses. If your monthly payroll deductions are $5,000 and you’re two weeks late, that’s a $500 penalty plus interest, money that could have gone toward equipment, continuing education, or marketing your new practice.

Common First-Year Payroll Mistakes to Avoid

Misclassifying Employees as Contractors

Some clinic owners think they can save on paperwork by paying staff as independent contractors rather than employees. This approach usually doesn’t meet CRA standards. The CRA looks at the actual working relationship, not what you call it on paper.

If someone works set hours, uses your equipment, and follows your directions, they’re probably an employee. Getting this wrong can lead to back payments for CPP, EI, and income tax, plus penalties and interest.

Missing Records of Employment

When an employee’s earnings stop or are interrupted, you must file a Record of Employment (ROE) within five calendar days. This applies to full-time, part-time, and even some contract positions. Missing this deadline delays your former employee’s EI benefits and puts you on Service Canada’s radar for the wrong reasons.

Poor Record-Keeping

The CRA requires you to keep detailed payroll records for at least six years. This includes hours worked, rates of pay, deductions made, and dates of every payroll. Good records protect you during an audit and make tax time much less stressful.

Ignoring Taxable Benefits

If you provide your team with benefits like subsidized parking, gym memberships, or meals, many of these are taxable. You need to calculate their value, add them to the employee’s income, and make the appropriate deductions. Forgetting this can create problems when you prepare year-end T4 slips.

Setting Yourself Up for Success

Managing payroll doesn’t have to be overwhelming. Many veterinary practice owners use cloud-based accounting software to automate calculations and remittances. This reduces errors and frees up time for patient care.

Consider working with an accountant who understands veterinary practices. The industry has unique needs, from managing inventory for medications and supplies to planning for equipment purchases and understanding the specific tax implications of your business structure.

Despite veterinarian vacancies across Canada, your practice can attract great talent. When you handle payroll properly from day one, you create trust with your team and avoid the stress of dealing with CRA penalties down the road.

Taking the Next Steps

Opening a veterinary practice is both exciting and demanding. While payroll might not be the most thrilling part of business ownership, getting it right protects your practice and your people.

Take the time now to register your accounts, understand your obligations, and set up reliable systems. You’ll appreciate having everything in order when tax season arrives.

At Envision Accounting, we help veterinary practices across Alberta turn complex financial requirements into straightforward action plans. If you’d like support setting up your payroll accounts or want to ensure you’re on the right track, book a free Financial Assessment and let’s talk about building a solid financial foundation for your practice.

Frequently Asked Questions

Do I need a payroll account if I’m the only person working at my clinic?
If you’re a sole proprietor and the only person working, you don’t need a payroll account because you don’t pay yourself a salary with source deductions. However, if you’ve incorporated your practice and pay yourself any salary or wages, you’ll need one.
What happens if I miss a remittance deadline?
The CRA will charge penalties starting at 3% for being just one day late, increasing to 10% after seven days. You’ll also face daily compound interest on the overdue amount. Pay as soon as possible to minimize the damage.
Can I change my remitter type if monthly payments are too frequent?
The CRA assigns your remitter type based on your Average Monthly Withholding Amount and compliance history. New employers with very low payroll might qualify for quarterly remittances, but you can’t simply choose your schedule. The CRA reassesses this annually.
Are bonuses and tips subject to the same deductions as regular wages?
Yes. CPP, EI, and income tax deductions apply to bonuses, tips, commissions, and most other forms of employee compensation. Make sure to include these in your payroll calculations.
Should I hire a payroll service or do it myself?
Many new clinic owners start by doing payroll themselves using accounting software. As your practice grows and your team expands, a payroll service or accountant can save time and reduce errors. Consider your comfort level with numbers and the complexity of your payroll.