How Payroll Complexity Creeps In

The funny thing about growth is that it rarely feels as organized as it looks on paper.

When your company had just two or three employees, payroll was simple: fixed salaries, one pay date, and maybe a basic benefits plan. Everyone got paid. End of story.

But as your business grows  (new hires, new locations, contractors, different pay structures) payroll shifts from a quick administrative task into a complex mix of deadlines, deductions, compliance rules, and financial analysis. And yet, it’s still easy to assume payroll is “fine” simply because people are getting paid.

Sure, everyone’s getting paid, but a paycheck hitting the bank is not the same as having a payroll system that’s accurate, compliant, and scalable.

Why Payroll Complexity Grows Faster Than You Think

Growth brings a set of payroll challenges most companies don’t anticipate until they’re already a problem. Examples include:

• Headcount triggers - Crossing thresholds for EHT (Employer Health Tax) or WSIB/WCB premiums. Not being compliant and ensuring remittances are paid can have significant financial implications, as you’re looking at 1.95% (in Ontario) multiplied by each dollar of salaries/wages above $1M. And this can be much more if there are associated companies (i.e. if there is cross-ownership between multiple entities).
• Multi-jurisdiction setups - Employees in different provinces (or countries) with unique vacation rules, statutory holiday pay, and tax rates. Our payroll team, which includes PCP- and CPM-designated specialists, routinely handles these scenarios for companies with 10 to 500+ employees, ensuring compliance with EHT, WSIB/WCB, and provincial vacation pay rules.
• Accelerated CRA remittances - Hitting higher payroll totals that require more frequent source deduction payments.
• Classification issues - Contractors reclassified as employees, triggering retroactive CPP/EI and vacation pay obligations.
• Terminations & severance - Ensuring payouts align with employment standards, payroll tax rules, and T4/T4A reporting.
  
• Data integrity - Benefits still deducted for former employees, or promotions not reflected in payroll because HR and finance weren’t aligned.
  

Why “Set and Forget” Payroll Is Risky

We’ve seen companies grow from 12 to 47 employees without reviewing payroll processes - everything looked fine until we dug deeper:

• EHT thresholds had been exceeded months earlier without adjustments
• A contractor was actually an employee under CRA rules, triggering retroactive deductions
• Benefit premiums were still coming off the pay of someone who left six months ago

None of this was intentional. It’s what happens when you’re running full-speed ahead without checking if payroll processes can keep up. That’s why our specialists reconcile T4/T4A slips, review benefits deductions, and even handle CRA correspondence before small issues turn into big ones.

Payroll Reviews: Not Just Year-End Housekeeping

Too often, payroll reviews happen only once a year, usually at year-end. But much can change in 12 months:

• Legislation updates can make your vacation accrual method non-compliant
• New commission structures can quietly inflate payroll costs
• A change in benefits providers might not sync properly with payroll
• Hiring in new provinces may require new tax setups and statutory holiday rules

Our year-end process includes reconciling every T4 slip, verifying CPP/EI contributions, and proactively resolving CRA inquiries before they turn into penalties. Regular reviews - ideally mid-year and year-end - give you two chances to catch and fix these issues before they snowball into penalties, costly adjustments, or employee trust issues.

The Strategic Side of Payroll

Handled well, payroll stops being a back-office chore and starts shaping smarter business decisions:

• Departmental cost tracking for margin analysis and budget forecasting
• Overtime and turnover trends to inform staffing decisions
• Benefit utilization analysis to assess ROI on employee perks
• Integration to accounting systems to reduce manual data entry/bookkeeping/accounting work

If your payroll system isn’t structured to produce this insight, you’re missing valuable data that can guide growth decisions.

Trust Is on the Line

Payroll errors are beyond technical - they’re personal. They affect people’s rent, groceries, and tuition. A single underpayment can damage trust faster than a missed project deadline.

When payroll is accurate, it goes unnoticed. When it’s wrong, it’s all anyone talks about. Regular reviews send a clear message to employees: accuracy and fairness matter here.

If You’ve Grown, Payroll Should Grow Too

The payroll setup that worked for 10 employees rarely works for 30 and what works at 30, may not work at 50 (and so on). Systems, structures, and processes need to scale alongside headcount, complexity, and strategic goals.

If your payroll hasn’t been reviewed in a while, that’s a sign it’s overdue. The longer you wait, the more likely small issues will turn into costly fixes. A quick, structured review now can save you penalties, protect employee trust, and give you the data you need to make better decisions.

Our PCP and CPM-designated payroll specialists manage payroll for hundreds of companies (from mid-sized teams to growing multi-entity operations), handling everything from compliance to CRA correspondence. If you’d like to see what a proactive payroll review could do for your business, book a meeting with our team and we’ll walk you through it.