In Canada, according to Statista, the workforce stood at 20.72 million in 2024, with this expected to grow by about 360,000 people between 2024 and 2026. If you’re operating a business and expect to be hiring your first employee this year and contributing to the workforce, you’ve come to the right place. Today’s blog will explore how to hire your first employee in Canada.
At Bizfund, we know how much of a milestone it is to hire your very first employee. We understand it can be a stressful process. We also know it’s difficult to understand what comes first and what you need to know. That’s why our team outlines employer obligations in Canada, so you have a clearer idea of where to begin.
Before You Hire: Legal Requirements
When looking into how to hire your first employee in Canada, the first thing you need to do is learn as much as you can about the legal requirements.
Register for a CRA Payroll Account
Before you can even think of paying an employee that you hire, you need to register with the Canada Revenue Agency (CRA) as an employer. This will give you access to a payroll account. This account lets you deduct and remit CPP contributions, EI premiums, and income tax. If you don’t register for a CRA payroll account, you can’t pay wages in a compliant way. And this could open a whole can of problems down the line for your small business.
Get a Business Number
To connect payroll to taxes and other registrations for your business, you need a Business Number (BN). Your BN sits at the center of all your business’s activity. So, it’s possible that you already have one, but if you don’t, it’s important to apply for one before you hire.
If you’re not sure how to apply for a business number, the process is simple. All you need to do is:
- Choose your business structure. This can be a partnership, sole proprietorship, corporation, or something else.
- Register your business name to ensure it is unique. You can check availability through the Canadian government’s name search system.
- Prepare the documentation you need. Usually, this includes documentation showing valid contact information, operating names, mailing and physical addresses, and registration details.
- Complete your CRA application. You can do this online if you want your application approved rather quickly. To apply online, go to the CRA ‘My Business Account’ portal. Alternatively, you can apply by email or fax.
It really is that simple to ensure you’re checking off this vital step before you hire your first employee.
Provincial Employment Standards
Another important step before the hiring process begins is to learn about provincial employment standards. When we discuss this, we’re referring to your legal employment obligations in the province where your company operates. These legal obligations vary by province but typically include overtime rules, minimum wage, vacation pay, and termination requirements.
It’s important to understand that these employment standards are part of the budgeting process as well. If you don’t account for them, you could run into cash flow issues later on. So, since it’s important to understand what employees actually cost (more on this later), you’ll find a quick look at how overtime rules, minimum wage, and vacation pay can differ:
| Province | Overtime Rules | Minimum Wage | Vacation Pay |
| Ontario | 1.5× after 44 hours/week | $17.20/hr | 4% (2 weeks) |
| Alberta | 1.5× after 8 hrs/day or 44 hrs/week | $15.00/hr | 4% (2 weeks) |
| British Columbia | 1.5× after 8 hrs/day or 40 hrs/week | $17.40/hr | 4% (2 weeks) |
Here’s How to Hire Your First Employee in Canada
Now that you know the steps that come before, you can learn more about how to actually go about hiring your first employee in Canada. Below, we share more on creating the job posting, the interview and selection process, and the onboarding essentials. This covers most of what you should do when hiring an employee.
Creating the Job Posting
Define the Role
It’s important not to get ahead of yourself. This means you shouldn’t think about where you will post the job or how you will word things until after you have made the role clear. If you don’t make the role clear, you risk your first hire failing. So make sure you know what kind of help you need that solves your problem first.
At this stage of the process, the clearer you are in the role and your expectations, the better you can protect your budget. If you create a role that is too broad, it can quickly deviate from its original scope. This is damaging to your business and unfair to the employee. Most often, if you define boundaries early with the role, you’ll have more control over it financially.
Set Pay and Hours
Even if you think your business’s profit trajectory is going to kick off, it’s still best to be conservative when setting pay and hours for a new employee. This means you need to set your payment and scheduling based on what your business can consistently support.
We know it can be tempting to stretch what you can afford to attract better candidates. However, your payroll is a recurring obligation, so it’s best to keep this at the forefront of your decisions. With this in mind, determine how many hours you can afford and how they fit into your monthly cash flow. Only then can you include those in the job posting.
Accurately Describe the Position
If there is one thing many employers do wrong when hiring their first employee (more on these mistakes later), it’s trying to make their job posting exciting. There’s no need. Really. It’s more beneficial for your business to be honest and transparent, as this will attract good candidates.
You should also try to avoid vague language, as this is one way to start the dreadful, recurring pattern of near-endless hires when employees find out your actual expectations. With clear descriptions, you can reduce turnover, protecting the time and money you’ve invested in hiring and training.
Avoid the ‘Everything’ Role
As much as you might want to hire someone who can handle ‘everything,’ this isn’t feasible, as we already said. Instead, consider hiring an entry-level employee as your first hire and look for someone who can relieve the most pressure on your time.
This usually means hiring an individual to handle scheduling, administrative work, customer follow-ups, or production support. When you hire for this, you’ll see measurable results and won’t need to pay for a senior-level role.
The Interview and Selection Process
The interview and selection process is the next step. If you’re looking into how to hire your first employee in Canada, here’s how to go about handling these facets of the process:
- Try not to let urgency drive your decisions: Even if you’re feeling overwhelmed and stretched too thin, it’s best not to rush the hiring process. In the long run, rushing and hiring the wrong person for the job can cost your business more than carrying the workload for a little longer.
- Look for reliability over anything else: Someone can have the best accolades and extensive experience and still be the wrong person for the job if they are unreliable. That’s why it should be the top thing you look for in a candidate. You need to know they have experience and can be consistent by showing up, following through, and communicating at every step. This is invaluable.
- Make sure to ask about real situations: It’s important when interviewing to ask questions that give you better insight into how someone will perform in the existing role. This means you should ask them how they handle mistakes, routine work, and tight deadlines. This will tell you more than you think about how they will perform in the future.
- Note how the conversation flows: Many employers overlook this during the interview and selection process. Often, if communication feels strained at this point in the process, it doesn’t bode well for when they start in the role. So try to hire someone who matches your company’s communication standards.
Onboarding Essentials
When you’re hiring your first employee in a small business, there are a few onboarding essentials you need to know:
- Start with Paperwork Before Work Begins
Before the first shift or day begins, ensure all forms and paperwork are ready. Usually, this means having tax documents, payroll details, and any role agreements on hand.
If you get this out of the way early, the employee can focus on the role and learning the job rather than worrying about completing paperwork. In addition, it should also help slow interruptions during the first week. You won’t need to pause training to chase down paperwork, starting everyone off on the right foot.
- Walk Through the Role Slowly
It’s understandable that you want boots on the ground and to get the ball rolling from the get-go once an employee is hired. But it’s best to slow things down. The first few days should focus on orienting your employee to the processes.
A new employee will need time to learn how tasks are done. You should give them this grace and recognize that they likely won’t be able to perform tasks independently for a little while. Not to mention, a slower pace in the beginning also helps reduce costly mistakes.
- Show the Employee How to Communicate for Your Business
As much as some of us might not want to believe it, every workplace has its own way of handling questions and updates. No two roles or companies handle communication in exactly the same way. So, with this in mind, it’s important during onboarding to explain where you share information, whose decisions go through, and how to raise issues.
If you don’t explain this at the beginning, you’ll encounter miscommunication, and this can be hugely detrimental. In fact, according to the Society for Human Resource Management, poor communication costs US businesses about $62.4 million every year for every 100 employees. Although this is a US statistic, it gives a good indication of costs for Canadian businesses.
The Financial Side of Hiring
When hiring your first employee, there are also a few financial obligations for employers in Canada. To help you get off on the right foot, we share a few of the financial considerations it’s best to keep at the forefront:
- Calculating the true cost of an employee: The true cost of an employee is typically 25 to 40% higher than their base hourly or annual wage. The cost to the business is more than simply wages. You must also consider administrative costs, benefits, and productivity losses.
- CPP, EI contributions: The real cost of hiring increases when you consider CPP and EI contributions, which are mandatory employer expenses. These costs are calculated every pay period and increase with wages. Fortunately, although they must be paid, you can treat them as a predictable, recurring operational cost in your payroll budget.
- When to consider financing for expansion: When you’re facing payroll obligations and incoming payments aren’t happening as quickly as needed, you could consider financing. This is a cost many businesses in Canada take on to help keep their payroll stable while their revenue catches up. If you want to consider this, a merchant cash advance is one of the very best options. It’s not a traditional loan, but it’s available quickly and offers flexible payments.
Common First-Hire Mistakes to Avoid
The last thing you want is to make the wrong hiring decision. That’s why we share below a few first-hire mistakes you can try to avoid:
- Assuming your first hire will fix every issue: Your first employee will support growth, but you can’t expect them to replace structure, leadership, or proper planning. If you don’t want to experience disappointment early on, avoid placing too much pressure on one person.
- Choosing familiarity over stability: While it may feel safer to hire someone you know, it is not the best choice for your first employee. Unfortunately, hiring someone you know can complicate accountability and blur professional boundaries.
- Skipping probation: It might be tempting, but you need that probationary period. It serves as a learning period for both parties, and if you don’t have it in place, small issues can be missed and become difficult to fix later.
How to Hire Your First Employee in Canada: The Takeaways
We hope that you now have a better understanding of how to hire your first employee in Canada. As you can tell, it’s important to understand your legal obligations, and you must be transparent and honest when creating your job posting.
You should also make sound decisions during the interview and selection process and avoid rushing the onboarding process. If you keep these things in mind while also remembering there are financial options if you need a little extra help, you’re well on your way to hiring the right candidate.
If you would like to explore a trustworthy merchant cash advance service and need a little advice, our team at Bizfund is just one click away.
