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Jane Payroll (Beta): Pay Types

  1. Payroll
  2. Jane Payroll (Beta): Pay Types

    3. 22 min read
    Practice Plan Thrive Plan Legacy Plans

Setting Up Your Pay Types

Now that you have completed onboarding and verified your bank account, one of the key steps before running your first payroll is to set up your Pay Types.

What Is a Pay Type?

Pay Types tell Jane how each person gets paid.

The Pay Type you choose for each staff member matters more than you might think. It impacts:

  • Payroll tax deductions — whether CPP, EI, federal income tax, and provincial income tax are withheld.
  • Vacation pay accrual — whether the pay contributes to a staff member’s vacation pay accrual.
  • Year-end reporting — how the income is reported on T4s and T4As (and which boxes it lands in).

That’s why choosing the right Pay Type is important. If you aren’t sure which one to use:

  • Reach out to our team — we’re happy to help you pick the right one.
  • Talk to your accountant if your questions are more on the year-end reporting and compliance side of things.

Jane includes a list of system-default Pay Types you can choose from. You don’t need to use all of them — you’ll just pick the ones that match how you pay your team.

We strongly recommend creating your own custom-named version of each default you use, because:

  • The name of the Pay Type is what shows up on your staff’s pay stubs.
  • And you can’t change the name after you’ve run payroll with it.

Creating your own versions from the start gives you control over what your staff sees and helps keep things clear and consistent long-term.

Common Pay Types and When to Use Them

Here are the Pay Types most clinics end up using, with guidance on when each one is the right fit.

Hourly Compensation

A great fit for any staff paid by the hour, which are typically administrative staff, front desk, support roles, and anyone whose hours you track with Timesheets.

Tax treatment: Subject to CPP, EI, and income tax. Reports as regular employment income on T4 Box 14 (employees) or T4A Box 48 (contractors).

Salary Compensation

Use this for any staff who receive a fixed annual salary, regardless of hours worked or services provided.

💡 If you’re a clinic owner who pays yourself through regular owner’s draws or dividends, Salary Compensation is not the one for you — see Owner’s Draw below.

Tax treatment: Subject to CPP, EI, and income tax. Reports as regular employment income on T4 Box 14 (employees) or T4A Box 48 (contractors).

Fee Split Compensation

A very common way to pay practitioners. Use this when a staff member earns a flat fee or percentage of the services they provide to patients. This is sometimes called a “service split” or “revenue split.”

If you calculate someone’s pay using the Compensation Report, Fee Split Compensation is almost always the one to pick.

Tax treatment: Subject to CPP, EI, and income tax. Reports as regular employment income on T4 Box 14 (employees) or T4A Box 48 (contractors).

Performance-based Commission

This Pay Type is specifically for staff who meet the CRA’s definition of a commissioned employee, which is typically someone whose role is primarily commission-based, like a salesperson. It’s less common in clinic settings.

A few things to know:

  • The source deductions (CPP, EI, income tax) are calculated the same way as Fee Split Compensation. The only real difference is how the income is reported on year-end forms.
  • Most practitioners paid on a revenue split are not CRA-defined commissioned employees, even if you casually refer to their pay as “commission.” For them, Fee Split Compensation is usually the right choice.
  • If you’re unsure which applies to your situation, we recommend chatting with your accountant.

Tax treatment: Subject to CPP, EI, and income tax. Reports as commission income on T4 Box 14 with code 42 (employees) or T4A Box 20 (contractors).

Owner’s Draw

Use this when you’re paying yourself as the business owner. No CPP, EI, or income tax is withheld, as this Pay Type simply moves money from your business bank account to you, and you handle income reporting yourself at tax time.

  • Sole proprietors: This is the right choice for taking owner’s draws from your business.
  • Incorporated owners: Use this for occasional dividends, and customize the name to something like Dividend so it’s clear on your records (and your accountant’s).

💡 Tip: When you assign Owner’s Draw to your staff profile, you can enter a default amount that auto-fills each payroll run. You can still adjust it on the fly if you want to draw more or less in a given period.

Tax treatment: No source deductions. Not reported on T4 or T4A, as owner’s handle this at tax time with their individual filings.

Reimbursement

A flexible Pay Type with no source deductions and no reporting on year-end forms. Useful any time you’re paying a staff member back for something that isn’t really income.

A common contractor use case: if your contractors collect HST or GST on the services they deliver, you can set up a separate Reimbursement Pay Type (named something like HST amounts) to show those tax amounts on their pay stub. This keeps it clear which portion of their payout is tax they’ve collected on behalf of clients versus actual income. This keeps those tax amounts off their T4A at year-end, since they’re not income.

Tax treatment: No source deductions. Not reported on T4 or T4A.

Bonus - Discretionary

Use this any time you’re giving a staff member a bonus — like a performance bonus or year-end bonus. Bonuses have specific tax calculations that vary by province, and Jane will handle those for you automatically.

Tax treatment: Subject to CPP, EI, and income tax (calculated using the CRA’s bonus tax method). Reports on T4 Box 14 (employees) or T4A Box 48 (contractors).

Vacation Pay - Cashout

Use this when you need to pay out a staff member’s accumulated vacation balance. This only applies if you have staff who accrue vacation pay over time, rather than getting it paid out on every paycheck. Even then, it usually only comes up in two situations:

  • A staff member is leaving your practice
  • You’re transitioning a staff member from accrued vacation to per-paycheck vacation pay

Tax treatment: Subject to CPP, EI, and income tax. Reports on T4 Box 14 (employees) or T4A Box 48 (contractors).

Controlled Tips

Use this for tips that you collect from patients and then distribute to staff through payroll. (Tips that customers hand directly to staff, known as “direct tips”, don’t need to flow through Jane Payroll.) The CRA treats controlled tips as employment income, so they’re subject to the usual source deductions.

A common Jane Payments use case: If you use Jane Payments and patients can leave tips for practitioners, you can use Controlled Tips to separate out tip income from service compensation on pay stubs. If you’re going this route, just make sure to separate the tip section of the Compensation Report from the overall compensation number when entering values into payroll — otherwise tips could be paid out twice (once mixed into the Fee Split amount, and again as Controlled Tips).

Tax treatment: Subject to CPP, EI, and income tax. Reports on T4 Box 14 (employees) or T4A Box 48 (contractors).

💡 A note on Stat Holiday Pay: There are a few different Stat Holiday Pay options in Jane, depending on whether your staff worked the holiday, didn’t work the holiday, or how you calculate the average daily wage. For help choosing the right one, check out our Stat Holiday guide.

Setting Up Your Pay Types in Jane

To get started, you will want to head to the Payroll area under Billing → Account. From there, you can click Edit next to Pay Types.

Then you can click + Add Pay Type to begin setting up a new pay type.

  1. Start by choosing one of Jane’s system defaults (e.g., Hourly Compensation).
  2. If you want to customize the default name, click the pencil icon and give it a clear, descriptive name, for example, “Service Split Compensation” or “Admin (Hourly).” Please keep in mind that this is what will appear on pay stubs.
  3. Click Save.

Repeat this step for each Pay Type that you will need.

💡 Jane Tip: If you want to use the same Pay Type but have different default values (e.g., you have more than one hourly employee and want to set some up at $18/hr and some at $23/hr), you can click + Add a Policy and add multiple policies within a single Pay Type. These policies can then be selected when assigning Pay Types to staff.

Assigning Pay Types to Staff

Once you have created your Pay Types, the next step is to assign them to each staff member. You can do this by heading to the Staff Tab and into the specific staff member’s profile. From here, you’ll head to the Payroll Tab and click edit beside Pay Types.

  1. Click Add Pay Type.
  2. Choose the appropriate Pay Type from the list.
  3. If the Pay Type includes a rate (e.g., hourly or salary), enter that staff member’s specific rate here.
  4. Click Save.

Repeat this for every staff member until each one has at least one Pay Type assigned.

📍 Pro-Tip: It is common for some staff to have more than one Pay Type. For example, one for hourly admin work and one for services compensation. You can assign more than one pay type to an individual staff member.

Before You Run Your First Payroll

Here are a few final checks to make sure everything is ready:

  1. Double-check the names of your Pay Types before your first payroll run. Once payroll has been processed, Pay Type names can’t be changed without creating additional line items on pay stubs, which may cause confusion for staff members.
  2. Confirm all staff are assigned correctly. Head to Billing → Payroll → Account → Pay Types. For each Pay Type, you will see how many staff members are assigned. Use this to double-check that the numbers match what you expect, for example, “I expected 10 staff, and I see 10.”
  3. Verify that all Pay Types and assigned staff appear when you run payroll. You should see a separate column for each Pay Type you have created on the payroll dashboard. If a Pay Type is missing for a staff member, try refreshing the page. If it is still not there, it usually means the Pay Type has not been assigned. Go back to the staff member’s Payroll → Pay Types section, assign it, and then return to the payroll run.

Frequently Asked Questions

Can staff have more than one Pay Type?

Yes! Many clinics have staff who wear multiple hats. For example, a staff member might earn “Hourly Compensation” for admin hours and “Services Compensation” for client sessions. When you run payroll, both Pay Types will appear, and you will be able to enter the right values for each.

How should I set up a commission or service split?

If your practitioners earn a percentage of invoiced or collected billings, the Pay Type you choose depends on how you want to report this income to the CRA on year-end tax forms.

  • (Most common) If you want this income treated as normal employment income, choose Fee Split Compensation. At year-end, income from this Pay Type will be reported in box 14 of the T4 for employees, and box 48 on the T4A for contractors.
  • (Less common) If you want this income reported to the CRA as commission earnings, choose Performance-based Commission. At year-end, income from this Pay Type will be reported in box 14 with code 42 of the T4 for employees, and box 20 on the T4A for contractors.

Once you have confirmed how you want this income treated:

  1. Choose your Pay Type (e.g., Services Compensation).
  2. Give it a clear, descriptive name like “Service Split Compensation.” This is what your staff will see on their pay stubs.
  3. Save it.
  4. Assign it to the appropriate practitioners via Staff → [Staff Name] → Payroll → Pay Types.

When you run payroll, open your Compensation Report in another tab and copy each practitioner’s totals into Jane. Jane does not automatically pull these numbers in, so you will enter them manually each pay period.

How should I set up hourly staff?

For admin or support staff who are paid hourly:

  1. Select Hourly Compensation as your system default.
  2. Give it a clear name like “Admin (Hourly)” or “Front Desk (Hourly).”
  3. Assign it to each relevant staff member.

If a staff member earns different hourly rates (for example, one rate for admin work and one for bookkeeping), create two separate Pay Types using the Hourly Compensation default, each with its own name.

📍 Pro-Tip: If you do not have one default hourly rate for all staff, you can leave the default rate blank and set each person’s rate directly in their staff profile when assigning the Pay Type.

What Pay Type should I use for HST or GST collected amounts?

If any of the services your contractors deliver collect HST or GST amounts, you’re going to want to create a separate pay type to account for those collected amounts.

The Reimbursement pay type is what we recommend using to pay out HST/GST amounts to Contractors, as this will show Year-To-Date amounts on pay stubs, but will not be reported on T4As at the end of the year.

To create an HST or GST pay type, you’re going to start by heading to the Billing Tab → Payroll → Account → Pay Type and follow the steps as outlined in the guide above to Add Pay Type. You’ll select the Reimbursement system-default, and you can customize the name to “HST amounts” or “GST amounts”. Once set up, you can assign this newly created pay type to the relevant staff profiles.

What is an Owner's Draw, and how do I set it up?

There is a system-default Pay Type called Owner’s Draw that you can use if you, as a business owner, want to pay yourself through Jane Payroll. This pay type is a reimbursement pay type that does not withhold any CPP, EI, or income tax and isn’t reported as income on your year-end tax forms. This is something you will manage yourself during tax filing.

Depending on whether you are a sole proprietor or an incorporated entity, the setup may look different. You will want to first determine if you want to set yourself up as an employee or contractor, depending on how you’re classified with the CRA.

There are a couple of options and tax implications here depending on how you are classified. We recommend connecting with your accountant or financial adviser to confirm the best setup for you. If you have any questions, please reach out to the Jane Payroll Support Team.

To create the Owner’s Draw pay type, you’re going to start by heading to the Billing Tab → Payroll → Account → Pay Type and follow the steps as outlined in the guide above to Add Pay Type. You’ll select the Owner’s Draw system-default, and you can customize the name based on your needs.

Lastly, you will assign this newly created pay type to your staff profile. When assigning it to your staff profile, you can enter a default amount. That amount will automatically populate each time you run payroll. You can still adjust it on the fly if you would like to draw more or less in a given pay period.

How do I set up dividends?

As a business owner, if you want to pay yourself dividends through Jane Payroll, you may use the Owner’s Draw pay type in Jane. This pay type is a reimbursement pay type that does not withhold any CPP, EI, or income tax and isn’t reported as income on your year-end tax forms. This is something you will manage yourself during tax filing.

We recommend customizing the name of the pay type as “Dividend” when creating it in Jane as well as in your own records and with your accountant.

To create a dividend pay type, you’re going to start by heading to the Billing Tab → Payroll → Account → Pay Type and follow the steps as outlined in the guide above to Add Pay Type. You’ll select the Owner’s Draw system-default, and you can customize the name to “Dividend”. Once set up, you can assign this newly created pay type to your staff profile.

Can I rename a Pay Type later?

During onboarding, you will need to create your pay types for the first time; you’re welcome to customize them as needed. If you have customized the name of the pay type right from the start, you will have the ability to rename it later down the line if the need arises.

📍 However, an important piece to note if you do change the name of an existing, custom-named pay type, this will create a separate line on your staff’s pay stubs.

If you do not customize the name of the pay type when originally creating it and then use it during a payroll run, you will not be able to change the name at any point in the future.

We recommend creating your own custom versions of Jane’s defaults from the start, so you can name them exactly how you want before it has an impact on your staff’s pay stubs or anything is locked in.

Why are there so many Pay Type defaults?

Jane includes a variety of default Pay Types, as compensation looks different from one business to another. Each Pay Type reflects a specific kind of payment and carries different tax implications, so having distinct options ensures the right deductions are applied automatically.

You don’t need to use all of them. Simply review the list, choose the ones that apply to your staff, and create custom names so your team sees something clear and familiar on their pay stubs.

If you’re not sure default to use, please reach out to the Jane Payroll Support Team, and we will help you choose the right one.

Can I set up a Pay Type to automatically link to the Compensation Report or Timesheets?

Not at this time. Pay Types do not automatically link to the Compensation Report or Timesheets.

  • If you pay staff an hourly rate, you will enter each staff member’s rate when you assign their Pay Type. When you run payroll, you will let Jane know how many hours they worked and Jane will calculate their pay.
  • For salary, once you have entered a staff member’s salary rate, Jane will calculate their pay automatically each period.
  • If you are paying out commissions or using Timesheets, you will still need to run those reports in Jane separately. Those totals are not automatically pulled into Jane Payroll at this time.

We recognize how much this kind of automation would simplify payroll, and it’s definitely on our radar for the future.

Why can't I edit my Pay Type?

There are a couple of common reasons this might happen:

  1. You are using one of Jane’s system defaults. If you did not assign a custom name when you created the Pay Type, you are using one of Jane’s built-in defaults. These cannot be renamed. To use your own naming, create a new Pay Type and give it a custom name when you set it up.
  2. You already have a payroll in progress. If you have started your first payroll run (even just to preview it), that counts as an in-progress payroll. You will need to delete that in-progress payroll, refresh, and then you will be able to edit your Pay Types again. This can happen during onboarding if you click Run Payroll early just to take a look. No harm done, just delete it and refresh.