How you set up the owner in Jane Payroll depends on how the owner is compensated, which typically comes down to whether the business is a sole proprietorship or a corporation.
Sole Proprietor
Most sole proprietor owners pay themselves by drawing funds directly from the clinic bank account (called an Owner's Draw). If the owner would like to run those draws through Jane Payroll, they can be set up as a contractor using the Owner's Draw pay type.
Here's what that means in practice:
- Jane won't deduct CPP, EI, or income tax from Owner's Draw payments. This is expected. Jane handles it automatically by leaving those fields out for this pay type.
- The owner is responsible for managing and remitting their own taxes when filing their T1 personal tax return each year.
🩵 Jane Tip: Sole proprietor owners don't need to add themselves to Jane Payroll if they prefer to handle all bank draws outside of Jane.
Incorporated Business
If the clinic is incorporated and the owner is considered an employee of the business, set the owner up as a regular employee using a pay type such as Salary Compensation.
Here's what that means in practice:
- Jane calculates and remits CPP and income tax on the owner's behalf, the same as for other employees.
- If the owner controls more than 40% of the corporation, EI exemption applies. The owner can be marked as EI exempt in their Staff Profile > Payroll > Tax Info.
Important Notes
Not sure which setup or pay types are right for your situation? We recommend checking with your accountant or bookkeeper to make sure everything is configured correctly for your business.
Frequently Asked Questions
Do I need to add myself as the owner to Jane Payroll?
It depends. If the clinic is incorporated and the owner is considered an employee of the business, adding the owner to Jane Payroll is strongly recommended. If the clinic is a sole proprietorship, it's a convenience decision rather than a requirement.
I'm a sole proprietor with employees. Can I still use Jane Payroll?
Yes. As a sole proprietor, you can pay both contractors and employees through Jane Payroll.
As an incorporated business owner, I take both a salary and dividends. Can I set this up in Jane Payroll?
Yes. You can set up dividend payments using the Owner's Draw pay type. We'd recommend giving it a custom name like "Dividends" to keep things clear.
Payments made with the Owner's Draw pay type won't be included as income on year-end forms, as Jane automatically excludes CPP, EI, and income tax calculations for this pay type. The T5 for dividend payments will need to be handled outside of Jane Payroll. We recommend reaching out to your accountant for guidance on how to manage this on your tax filings.