The $30,000 threshold and hiring your first employee

As your business grows, you'll hit two critical milestones that trigger major compliance obligations: crossing $30,000 in revenue and hiring your first employee. Both changes bring tax registration, record-keeping requirements, and deadlines that can't be missed. Understanding what happens at each threshold—and preparing in advance—can save you from penalties, cash flow surprises, and the stress of scrambling through red tape when you should be focused on running your business.

The $30,000 GST/HST Threshold

Once your revenue from taxable supplies reaches $30,000, you must register for GST/HST. The key thing to understand is that this threshold is measured over any four consecutive calendar quarters—not a calendar year or fiscal year. This means you can cross it at any point in the year, and that moment triggers your legal obligations. You become responsible for charging GST/HST on the very next sale, and you have 29 days from the sale that put you over the threshold to register with the CRA.

How the Four-Quarter Calculation Works

Imagine you launch a consulting business in February. By the end of Q2, you've earned $12,000. By Q3, another $10,000. Q4 brings $6,000, and Q1 of the following year adds $3,000. When you reach that final $1,000 in Q1, you've now hit $32,000 over four rolling quarters—January through December of the previous year plus January of the current year. From that moment forward, GST/HST registration is mandatory, even if you didn't plan for it. The CRA will assess you for any tax you should have been collecting, even if you never charged customers.

Mandatory Versus Voluntary Registration

Registration becomes mandatory once you exceed the $30,000 threshold in a single calendar quarter or over four consecutive quarters. However, you're allowed to register voluntarily even if you're below the threshold, and for many growing businesses, this is worth doing early.

The main reason is input tax credits, or ITCs. Once you're registered, you can claim back the GST/HST you pay on business expenses—software subscriptions, office equipment, professional services, rent, and shipping. For a startup with significant upfront costs before revenue ramps up, voluntary registration can turn an expense liability into a refund. You claim ITCs on your GST/HST return by subtracting what you paid on inputs from what you collected on sales. If you paid more than you collected, the CRA refunds the difference.

Voluntary registration does come with a trade-off: you must file GST/HST returns regularly, even if you have nothing to remit. You're also committing to the administrative burden for at least 12 months. But if you have high startup costs or B2B customers, the ITCs often outweigh the paperwork.

What Happens When You Register

When you register for GST/HST, your effective date is either the day you exceed the threshold (mandatory registration) or a date you choose (voluntary registration). From that effective date onward, you can claim ITCs. For voluntary registration, you can generally backdate your effective date up to 30 days, or earlier with supporting documentation, which is useful if you've already paid GST/HST on startup expenses.

Once registered, you charge GST/HST on every taxable sale at the rate for your province—5% in Alberta, 12% combined GST/PST in British Columbia, 13% HST in Ontario, and similar rates across Canada. You file a GST/HST return for each reporting period (monthly, quarterly, or annually depending on your assignment). To claim ITCs, you need valid supplier documentation: invoices or receipts showing the GST/HST charged.

Hiring Your First Employee

Hiring your first employee transforms your tax obligations overnight. You move from being a self-employed business owner to a payroll account holder, a tax collector, and a year-end reporter. Before your first employee's first payday, you must register for a CRA payroll program account.

Setting Up Your Payroll Account

Register for a payroll account through CRA My Business Account online at my.canada.ca, or call the CRA's business enquiries line at 1-800-959-5525. If you already have a business number, you'll add a payroll program account (RP suffix) to it. If you don't have a business number yet, you'll receive one when you open your payroll account. Allow two to three weeks for processing before your planned first pay date—don't wait until the last minute.

Your payroll account number will look like this: 123456789 RP0001. The nine-digit number is your Business Number (BN), and the RP0001 is your payroll suffix. You'll use this number on all payroll remittances and reporting.

Source Deductions: What You Must Withhold and Remit

The moment you pay an employee, you become responsible for withholding taxes and other deductions from their paycheque and remitting them to the CRA on their behalf. These deductions are called source deductions, and they include:

• Federal and provincial income tax (the amount depends on the province and the employee's personal situation)
• Canada Pension Plan (CPP) contributions from the employee's gross earnings
• Employment Insurance (EI) premiums from the employee's earnings
• In Quebec, Quebec Pension Plan (QPP) and Quebec Parental Insurance Plan (QPIP) contributions

On top of what you deduct from your employee, you must also pay employer portions of CPP and EI. These are separate from the employee deductions and are paid by you, not taken from the employee's paycheque. Many new employers miss this: the employer share is in addition to the employee deduction, not subtracted from it.

To calculate the correct deductions, use the CRA's Payroll Deductions Online Calculator. Your employee must complete a Federal TD1 form and a Provincial TD1 form (or TP-1015.3-V in Quebec) within their first few days. These forms tell you their personal tax credits, which determine how much tax to withhold. Keep these forms in your records—do not send them to the CRA.

Collecting the SIN and Employment Documentation

Before you set up payroll, you must ask your employee for their Social Insurance Number (SIN). A SIN is a nine-digit number issued by Service Canada that uniquely identifies Canadian residents for tax, CPP, and EI purposes. You have three days from the employee's start date to request it. Accept a SIN card, a Confirmation of SIN letter, or other official documentation. Do not proceed with payroll if you don't have the SIN—you cannot process deductions correctly without it.

Year-End T4 Slips

At the end of every calendar year, you must issue a T4 slip (Statement of Remuneration Paid) to each employee and file copies with the CRA. A T4 summarizes the employee's total earnings, all source deductions withheld (income tax, CPP, EI), and any taxable benefits provided during the year. Your employee needs the T4 to file their personal tax return. You must issue T4s to all employees by February 28 of the following year and file them electronically with the CRA.

Do not issue T4s to independent contractors, freelancers, or vendors—only to employees. Misclassifying someone as a contractor when they should be an employee can trigger CRA enforcement, back-payment of CPP and EI, interest, and penalties.

Remittance Deadlines

You must remit source deductions and employer CPP/EI contributions to the CRA on a fixed schedule—either monthly or twice monthly, depending on the size of your payroll. Missing a remittance deadline triggers a 3% penalty on the shortfall, climbing to 20% if the delay persists. The CRA treats payroll remittances as trust money: if you fail to remit, the government can pursue you personally for repayment, even if your business is incorporated.

Posting Jobs and Finding Wage Subsidies

Before you hire, you need to recruit. The good news is that Canada offers free tools and funding to help you find and onboard talent.

Job Bank: Free Job Posting

Job Bank is a federal platform operated by Employment and Social Development Canada where you can post jobs for free. There are no hidden fees, no contracts, and you can advertise full-time, part-time, casual, apprenticeship, or student roles. Many employers use Job Bank as their primary recruitment channel, especially those seeking skilled trades or entry-level talent. You can also specify apprentice or student roles, which opens access to targeted candidate pools and potential wage subsidies.

To post on Job Bank, register an employer account at employer.jobbank.gc.ca, then create your job posting. Job Bank will connect you with local programs and services, including wage subsidies that can reduce your hiring costs.

Wage Subsidies for Apprentices and Students

Federal and provincial governments offer wage subsidies for hiring apprentices and students. When you post an apprentice job on Job Bank, you can indicate the apprenticeship level, and the platform will help match you with registered apprentices. Similarly, student jobs are flagged to attract learners looking for work-integrated experience. Many of these programs offer partial wage subsidies—you pay part of the salary, and the government covers the rest, up to a cap.

To qualify for most subsidies, jobs must be advertised publicly, often on Job Bank itself. The rules vary by province and industry, so check your provincial ministry of labour or the federal Skills for Success portal for current programs in your area. The subsidies can significantly reduce your first-year hiring costs, especially for entry-level or apprenticeship roles.

Planning Your First Year

The window from first revenue to first hire is crucial. Start monitoring your revenue now. As you approach $30,000 in any four consecutive quarters, get familiar with your GST/HST obligations. Consider whether voluntary registration makes sense for your business model. If you're planning to hire soon, open your payroll account two to three weeks before the first payday. Keep payroll deduction tables current—they change every January, and using stale tables will create reconciliation headaches at year-end.

Keep accurate records from day one: revenue, expenses, employee hours, deductions, and any taxable benefits. The CRA expects business owners to maintain organized records, and good habits now make tax time, audits, and growth much simpler. When in doubt, consult a payroll service provider, accountant, or contact the CRA directly. The cost of getting it right upfront is far lower than the cost of correcting mistakes later.