How to Do Payroll – Employment Deductions (EI)
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How to Do Payroll – Employment Deductions (EI)

How to Do Payroll – Employment Deductions (EI)
How to Do Payroll – Employment Deductions (EI) -www.aliko-aapayrollservices.com/blogWhen it comes to EI deductions, some small businesses risk overpayment, others underpay and some opt out (legally). How can you ensure you’re getting it right?
What is EI
Employment Insurance provides temporary financial assistance to unemployed Canadians who have lost their job through no fault of their own, while they look for work or upgrade their skills” (source: Government of Canada). It also assists Canadians with maternity, parental, sickness and compassionate care benefits.
If you are self-employed (operate your own business)
You have the option to contribute to EI or opt out of making payments. Remember if you don’t opt in you won’t be eligible should you ever require payments. It’s also important to note if your business were to fail you would not be eligible for EI payments.
So is it worth it for you? Each situation is unique, Larry MacDonald of MoneySense magazine says it’s worth considering if you see yourself needing time away from work. Otherwise, “if you think it’s unlikely you would ever take much time away from your business it’s probably not worth the cost”  Employment issuance: The entrepreneur’s dilemma.
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As per Canada Revenue, there are five types of EI special benefits:
·         Maternity benefits
·         Parental benefits
·         Sickness benefits
·         Compassionate care benefits
·         Parents of critically ill children benefits
Be aware “some individuals who work independently and are not hired as employees cannot register for these EI special benefits for self-employed people because they are already eligible to receive benefits through the regular EI program” Canada Revenue. Learn if you qualify and how to apply here.
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If you run a family business
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According to Canada Revenue, “If you are a family member, i.e. spouse or child, paid as an employee by the family enterprise – business or farm – you are like any other worker and can be paid EI benefits, as long as you meet the requirements for regular, maternity and parental, sickness or compassionate care benefits.” (Source: Employment Insurance and self-employed, farmers and independent workers).
Do your research to determine what’s right for you and your individual situation. If you’re not sure about the status of your company’s employees and whether they would qualify for EI should they need it, you can request a ruling from the CRA. Learn more in Should your family-run business pay into EI for relatives?
Employment Insurance can’t be collected by most relatives in family-run businesses. If you hire employees for your small business.
When you open a small business, you are responsible for paying your employees accurately and remitting payroll deductions. EI premiums are one of those deductions. What you can do
You have a choice – You can do research to determine the EI requirements for your small business and hope you get it right or you can rely on certified payroll professionals can help you determine your needs and provide accurate, reliable payroll with or without EI deductions.
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2 Comments to How to Do Payroll – Employment Deductions (EI) :

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Tanim on January-26-15 7:09 AM
Learnt about payroll!
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Henry on March-20-15 5:20 AM
Good blog
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