Payroll Tips and Traps for Clinic Owners

Blog / Payroll

Payroll Tips and Traps for Clinic Owners

When it comes to clinics, processing payroll is one of the most important — yet administratively burdensome — business tasks. Payroll compliance requirements continue to evolve and ensuring that you are on top of the rules can be a challenge.  

Below we take a look at some of the common payroll challenges that clinic owners face, as well as tips that will help improve your payroll process and ensure you use your time efficiently so that you can stay focused on growing your clinic. 

Common Payroll Challenges for Clinics

1. Payroll Errors Due to Manual Processes

For many clinics, payroll can be one of the most intimidating tasks. There are numerous rules and regulations to be aware of, forms to file, and deductions to withhold.  Missed deadlines or mistakes can result in financial penalties, and disgruntled employees. Despite the error-prone nature of manually processing payroll, it’s surprising how many clinics still rely on physical timesheets and excel spreadsheets! 

Common payroll processing errors include: 

  • Miscalculating Payroll: If your clinic is using physical timesheets to calculate payroll, you’re leaving it open to human error. With all the payroll data to track time and attendance, vacation pay, overtime, commissions, etc., it’s inevitable that the occasional mistake will be made.   
  • Misclassifying Employees: There’s a lot to remember when processing payroll, even more so when it’s done manually. Employee classification, for example, can have a big impact. In the case of contractors, they are usually responsible for their own payroll deductions and require T4As instead of T4s.
  • Missing Payroll Deadlines: Payroll must be processed several days in advance to ensure employees are paid on time and deductions are processed without remittance penalties and late fees. If you leave it too late, banks won’t have time to process the deposits, negatively impacting your team members.  

2. Legislation Can Be Complex

Clinic owners wear multiple hats from leader,  technical expert and planner, to strategist and marketer. The list is endless when you’re an entrepreneur. But some tasks require expertise that is tied to legislation, and not doing things correctly can cost you. Payroll is one of the tasks that should be taken off your plate as soon as possible.  

Some of the common complexities that come with payroll legislation include:

  • How much CPP and EI to deduct from the paychecks of full-time employees, as well as how much CPP and EI to contribute as the employer. 
  • How to calculate vacation pay and when to issue termination pay (which can differ from province to province and lead to legal ramifications if not done properly). 
  • How and when to file the Record of Employment (ROE) of employees who leave.
  • How and when to issue T4s (or T4As for contractors) and handle vacation rollover.

3. Allocating Employee Wages to Departments

Allocating employees to different departments in your organization is important. Payroll is your most significant expense, and to make sense of the numbers, you need team members assigned appropriately. 

Most payroll software today will generate a journal entry that you can customize based on these classifications so that employees are allocated accurately to the appropriate general ledger account, giving you an accurate monthly profit and loss statement. 

Typical classifications may include administration, facility, front desk, management, and marketing.  You may, from time-to-time, feel it is important to reallocate team members to different departments as roles evolve. Your payroll service provider should be able to accommodate these changes in your payroll software. That said, you want to prevent frequent changes in departments as this can make period-to-period comparisons less meaningful. 

Tips To Improve Your Clinic’s Payroll Processing 

1. Use Cloud-Based Payroll Software

Ditch the pen and paper, the calculator, even the spreadsheet! Instead, consider using cloud-based payroll software like QuickBooks Online or Payworks to manage your payroll. There are many benefits to cloud-based payroll software, the main one being that there’s one central location for all your employee payroll data.

In addition, cloud-based payroll software usually has direct deposit capabilities and can automatically generate employee T4s and ROEs. Some even have the ability to generate and remit payroll taxes directly to the CRA.

2. Use Payroll Software With Integrated Time Tracking

Having time tracking software means you can also ditch the physical spreadsheets and instead, employees and contractors can track their time and submit it electronically, allowing for easier and more accurate tracking of time allocated to a specific project. 

We recommend that Clinic owners use Payworks as their payroll platform, integrating the Time & Attendance module for hourly staff. This will help you get away from manual timesheets. You can also consider Payworks’ Time & Attendance module to track employee vacation. This is especially relevant for clinics that allow employees to accrue vacation, rather than pay it out each pay period.  

3. Hire a Payroll Compliance Practitioner (PCP) to Manage Your Payroll

Some clinic owners might feel that running payroll is the only option they can afford and that paying for payroll services (whether an accountant, outsourced contractor or payroll software) is something that’s out of budget.  

However, payroll for clinics can be complex and there are penalties for missed deadlines. It’s one of the critical functions that should be handled by an expert rather than being added to a clinic owner’s already full plate. Hiring a Payroll Compliance Practitioner (PCP) is a smart move making them responsible for some or all of the following: 

  • Calculating employer health tax and work-safe (WCB)/WSIB filings
  • Withholding employee deductions and making government remittances - while the software will do the work, there can be adjustments required for employee specific circumstances
  • Processing direct deposits or paychecks for hours worked
  • Submitting T4s for employee income tax filings
  • Issuing ROEs (record of employment) for exiting employees 
  • Preparing bookkeeping entries to get employee costs into the appropriate accounts on your monthly profit and loss statement

4. Outsource Your Payroll

In most cases, hiring a full-time PCP may not make financial sense for your organization. That’s when outsourcing your payroll to a service provider like Enkel might make more sense. Not only will you get access to PCPs and experienced payroll professionals who are well-versed in compliance and upcoming legislative changes, but it won’t add to your team headcount, eliminating the need to deal with payroll personnel turnover, training, or vacation coverage.  

Payroll is one of those functions that you cannot afford to get wrong. Payroll legislation can be complex and to ensure compliance a Payroll Compliance Practitioner should be managing payroll..  

If managing payroll is something you’re looking to outsource, Enkel’s experienced payroll team can work with you to streamline and automate this otherwise burdensome task. We combine the best in payroll technology (included in your service fee) with our experienced team to ensure timely, accurate payroll processing for our clients. 

Learn more about our payroll services.

Omar Visram
About Omar Visram
Omar Visram is the Co-founder and CEO of Enkel Backoffice Solutions Inc. Headquartered in Vancouver, Enkel provides bookkeeping, payroll, accounts payable and accounts receivable services to over 300 organizations Canada-wide.