How Can I Do Payroll Myself for Free? ✅ Complete Guide

How Can I Do Payroll Myself for Free is a frequently searched financial topic across Canada. Applying practical payroll management tips can help business owners avoid common mistakes and stay compliant from the beginning.  At Maxpro, we provide professional insights, transparent data, and practical recommendations to help business owners make smarter financial decisions and maintain compliance.

We deliver a broad range of Tax Accounting Services in BC and other locations across British Columbia.

 

Step-by-Step Instructions

1. Collect and organize all necessary data.
2. Register required business or payroll accounts with CRA.
3. Use approved templates or accounting software.
4. Record transactions or payments accurately.
5. Review all reports before final submission.

Following these steps will ensure accurate and compliant results. Maxpro can help you automate each stage for simplicity.

Our other tax services: 

• Personal Tax Filing 
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• WCB Employer Registration Coquitlam 
• ROE Service BC 

1. Collect and Organize Employee Information

Start by gathering all the key details for each employee:

• Full name, address, and SIN

• Start date and date of birth

• Signed TD1 federal and provincial forms

• Pay rate, schedule, benefits, and vacation details

Keep everything organized in a single spreadsheet with tabs for employee info, pay periods, and deductions.

2. Register a Payroll Account with CRA

If you don’t already have one, register a Business Number (BN) and add a Payroll (RP) account under it on the CRA website.
This allows you to legally deduct and remit taxes, CPP, and EI.
CRA will also assign your remitter type, which determines how often you need to send payroll deductions (monthly or more frequently).

3. Use Free Tools and Templates

You don’t need expensive payroll software.
Use the CRA’s Payroll Deductions Online Calculator (PDOC) it’s accurate and completely free.

Main deductions to calculate:

• CPP: 5.95% (matched by employer) up to the yearly maximum

• EI: 1.63% for employee, 1.4× that amount for employer

• Income Tax: calculated by PDOC based on TD1 forms. Understanding employee vs contractor rules is also important, as payroll deductions differ significantly depending on worker classification.

Record all results in your spreadsheet so you can track year-to-date totals.

4. Record Each Pay Run Accurately

For every pay period:

1. Enter gross pay (salary or hourly × hours worked) Choosing between compensation methods like salary vs dividends can also affect how payroll is structured and taxed.

2. Use PDOC to calculate Tax, CPP, and EI

3. Subtract deductions to get Net Pay

4. Pay employees and note payment details

5. Add up all deductions (Tax + CPP + EI) this is what you’ll remit to CRA

You can make CRA payments online through your bank or CRA’s “My Business Account.”

5. Review and Submit Reports

Before you send anything:

• Make sure total payroll equals what you paid through your bank

• Confirm year-to-date amounts for each employee are correct

• Stop CPP/EI once the employee hits their annual maximum

At year-end, issue T4 slips to employees and file them with CRA by February 28 of the following year.

Our other financial services: 

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2026 CPP, EI & CPP2 Rates You Need

Before you run a single pay, you need the current rates. Here are the official 2026 figures.

Contribution	2026 rate	Applies to	Max (each)
CPP	5.95%	Earnings $3,500 – $74,600 (YMPE)	$4,230.45
CPP2	4.0%	Earnings $74,600 – $85,000 (YAMPE)	$416.00
EI (employee)	1.63%	Earnings up to $68,900 (MIE)	$1,123.07
EI (employer)	2.282% (1.4× employee)	Earnings up to $68,900	$1,572.30

Three things employers miss: the $3,500 basic exemption applies to CPP only (not EI or CPP2); CPP2 kicks in once an employee’s earnings pass the YMPE; and the employer pays 1.4 times the employee’s EI premium. You match the employee’s CPP and CPP2 dollar-for-dollar.

Payroll Example: Calculating One Employee’s Pay

Let’s run one monthly pay for an employee earning $5,000 a month ($60,000 a year) in Ontario. (Income tax is illustrative via the CRA calculator; CPP and EI are exact 2026 amounts.)

Step	Amount
Gross pay	$5,000.00
CPP (5.95% on $5,000 − $291.67 monthly exemption)	−$280.15
EI (1.63% on $5,000)	−$81.50
Income tax (≈ via CRA PDOC, ON)	≈ −$735.79
Net pay to employee	≈ $3,902.56

Now the part new employers forget — your cost as the employer is more than the gross. On top of the $5,000 you also remit your share:

• Employer CPP: $280.15 (matches the employee)
• Employer EI: $114.10 (1.4 × the employee’s $81.50)

You then send the CRA the employee’s CPP + EI + income tax plus your employer CPP + EI. In this example, that’s about $1,491.69 remitted for the month — the deductions plus your employer portions.

Always confirm the income-tax line with the free CRA Payroll Deductions Online Calculator, which applies the exact 2026 tables.

Payroll Remittance Schedule & Due Dates

Once you’ve withheld deductions, you have to send them to the CRA on time. Your schedule depends on your average monthly remittance.

Remitter type	Who	When deductions are due
Quarterly	Eligible new/small employers with a perfect compliance record	By the 15th of the month after each quarter
Regular (monthly)	Most small employers	By the 15th of the following month
Accelerated	Larger employers (higher average remittances)	Up to several times a month

Most small businesses are regular monthly remitters: deductions for a given month are due by the 15th of the next month. T4 slips and the T4 Summary are separate — they’re due by the last day of February. Late remittances trigger penalties (starting at 3%) and interest, so calendar these dates.

At year-end, our T4 preparation service can file the slips for you.

Do Your Own Payroll vs Using Payroll Software

Doing payroll manually gives you full control and costs nothing, but it also takes time and requires accuracy. Payroll software, on the other hand, automates calculations, deductions, and CRA remittances — but usually comes with monthly fees.

Verdict:
If you have fewer than five employees and a simple pay structure, doing it yourself with CRA tools and a spreadsheet is completely manageable.
But if your business grows or has complex deductions, switching to reliable payroll software can save hours and prevent mistakes.

Recommended articles: 

• How to Automate Your Payroll 
• Improve Payroll Processing  
• Payroll Management Tips 

• Why Payroll Is Important 

 

How Can I Do Payroll Myself for Free? Practical Tools and Resources

To do payroll on your own, you only need a few free and official tools that handle calculations and record-keeping:

1. CRA Payroll Deductions Online Calculator (PDOC)
Use it to calculate accurate deductions for CPP, EI, and Income Tax. Just enter employee pay, province, and TD1 credits it gives you exact results instantly.

2. TD1 Federal & Provincial Forms (2026 versions)
Each employee must complete these to determine how much tax should be withheld.

3. CRA My Business Account
This is where you remit your source deductions (tax, CPP, EI) and view your remitter type and due dates.

4. Google Sheets or Excel Template
Use a simple spreadsheet to track:

• Employee details

• Pay periods

• CPP/EI calculations

• Tax withheld

• Net pay and CRA remittances

You can easily automate formulas for CPP and EI caps so you’ll never over-deduct.

5. CRA Employer Guide (Payroll Deductions)
A free online reference for all deduction rates, limits, and year-end reporting requirements.

These tools together let you run a fully compliant payroll system with zero paid software.

Simplify Payroll with Our Professional Services

Even though DIY payroll is possible, it can quickly become time-consuming as your business grows. Mistakes in deductions, missed deadlines, or incorrect T4 filings can lead to penalties or CRA audits.

Our professional Payroll Services in Canada handle everything for you — accurately and on time:

• Automated calculations for CPP, EI, and income tax

• Direct deposit to employees

• Monthly and year-end CRA filings (T4, ROE, summaries)

• Ongoing support for remittances and adjustments

We use advanced payroll systems while ensuring full compliance with Canadian regulations — so you can focus on running your business, not calculating taxes.

Get a free consultation today to see how we can simplify your payroll and save you hours every month.

Common DIY Payroll Mistakes to Avoid

Running payroll yourself is doable, but these are the errors that cost small employers the most:

• Using last year’s rates. CPP, EI and the thresholds change every January — always update them.
• Forgetting CPP2. Higher earners now have a second CPP tier; missing it under-deducts.
• Missing remittance deadlines. The 15th-of-the-month deadline is easy to overlook and penalised quickly.
• Misclassifying workers. Treating an employee as a contractor to skip deductions can trigger back taxes and penalties.
• Not remitting the employer portion. You owe your share of CPP and EI on top of what you withhold.
• Late or missing T4s and ROEs. Both have firm deadlines and affect your employees directly.

If payroll is eating your time, compare tools in our payroll software guide, or hand it off with our payroll services.

FAQ

Can I legally run payroll myself in Canada?
Yes. Any employer can run payroll, as long as you register for a CRA payroll account and remit CPP, EI and income tax correctly and on time.

What do I need before my first pay run?
A CRA payroll (RP) program account, each employee’s SIN and TD1 forms, and the 2026 CPP/EI rates or the CRA’s online calculator.

What’s the easiest free tool to calculate deductions?
The CRA Payroll Deductions Online Calculator (PDOC) — it’s free and uses the current rates.

How often do I have to remit to the CRA?
Most new small employers remit monthly (by the 15th of the next month); some qualify for quarterly remitting.

When are T4s due?
T4 slips and the T4 Summary are due by the last day of February for the previous calendar year.

What happens if I remit late?
The CRA charges penalties starting at 3% and rising with how late you are, plus interest — so deadlines matter.