A payroll close that takes an hour

STEP 01 OF 10

Freeze the time source before you touch payroll

Nothing in this checklist works if the underlying hours are still being edited while you close against them. If a field-to-office time capture system is in place, closing the time source is a single action, not a scramble to find the last foreman's paper stub.

Set a cutoff time on the day of the freeze, not just a date. A field crew that can still submit an edit at 4pm on close day, while payroll started reconciling at 9am, is not actually working from a frozen source — it just feels like one until the first correction shows up after the numbers were already pulled.

STEP 02 OF 10

Reconcile hours against the ESA ceiling and the agreement on file, not against a gut check

Confirm every logged week against the 44-hour overtime threshold and, where one exists, against the specific averaging agreement covering that worker — not a generic sense of “that looks about right.” The time-capture guide's worked example shows how differently the same set of hours computes with and without a signed agreement on file.

STEP 03 OF 10

Compute overtime once, at the pay-period level

Overtime pay is “1½ times the employee's regular rate of pay” once the 44-hour threshold is crossed. Compute it once against the full pay-period total for each worker, not once per job code the hours were charged to — job-costing allocation and payroll calculation are two different steps, and doing them in the wrong order is where duplicate overtime payments come from.

STEP 04 OF 10

Treat the public holiday formula as a standing calculation, not a special case

Ontario's formula is fixed: public holiday pay equals the regular wages earned in the four work weeks before the work week with the holiday in it, plus the vacation pay payable for those four weeks, divided by 20 — see the current formula. “Regular wages” specifically excludes overtime pay, vacation pay, public holiday pay and premium pay, so an overtime-heavy month does not inflate the holiday-pay figure. The worked example below runs the full calculation.

STEP 05 OF 10

Run the T5018 file separately from the payroll run

ITR 238(2) requires the return from a payer whose business income is derived primarily from construction activities; ITR 238(3)–(4) lets the reporting period be either calendar-year or fiscal-year, but once a period is chosen “it cannot be changed for subsequent years” without Ministerial authorization, and the return is due within six months after the end of the reporting period. Confirm which period your firm chose once, correctly, and build the close calendar around that deadline rather than payroll's own cadence.

ITR 238(5) carves out amounts that are wholly for goods for sale or lease — not every subcontractor payment needs to go on the T5018, and treating all of them as reportable creates its own reconciliation problem later.

STEP 06 OF 10

Check WSIB standing before payroll releases, not after

Confirm the account is “in good standing” and the clearance is still inside its 90-day window before payroll goes out, not as a separate task discovered later. A new registrant's initial advance payment is $250, applied as a credit to the account — budget it as a one-time setup cost, not a recurring line. Hiring and keeping a field crew covers the separate 10-day clock that starts registration in the first place.

Good standing covers two separate things, and a close that only checks one of them can still be surprised: the clearance auto-renews only while the account is current on both premium payments and on reporting filings. A firm that paid every invoice on time but missed a scheduled report can find the clearance lapsed anyway, at exactly the moment payroll needs it current.

STEP 07 OF 10

Reconcile GST/HST on subcontractor invoices as its own step

The federal component is fixed at 5% under ETA s.165(1) everywhere in Canada. The provincial component is not something to carry forward from a previous invoice or a different job — ETA s.123(1) makes the current prescribed rate the operative figure, so confirm the applicable rate for the province the work is actually in before this step, rather than assuming last quarter's number still applies. The comparison below sets out exactly which half of this calculation is fixed and which is not.

This is also the point in the close to confirm a smaller subcontractor is actually required to be charging GST/HST at all: the small-supplier threshold is $30,000 in taxable supplies (higher, at $50,000, for a public service body) measured over the four preceding calendar quarters. An invoice from a subcontractor under that threshold that still charges tax is worth a question before the payment is reconciled, not after.

STEP 08 OF 10

Close with one retention rule, not several remembered ones

Retain records “until the expiration of six years from the end of the last taxation year” to which they relate. If a return was never filed for a given year, that clock does not start — the records for that year must be kept regardless of how much later it is discovered.

A corporation closes down entirely has a shorter, different clock worth knowing before it applies to you: minute books, share-ownership records and the general ledger are retained until two years after the corporation is dissolved, not six years from a taxation year end. A non-corporate business follows the six-year rule instead, counted from the year the business ceased. Confirm which of the two applies to your structure before assuming one retention clock covers every record type.

The “no return filed” exception in ITA s.230(5) is worth building a specific check for, not just knowing about: if a return for a given year was never filed, the six-year clock for that year's records never starts running at all. A close that periodically purges anything older than six years, on a fixed schedule with no exception check, can destroy exactly the records a late-discovered filing gap would need.

STEP 09 OF 10

Keep electronic records electronically readable, not just backed up

The retention rule specifically requires electronic records be kept “in an electronically readable format” for the same period — a backup that can no longer be opened by current software does not satisfy the rule just because the file still exists somewhere.

STEP 10 OF 10

Automate the checklist steps, not the judgment calls

Steps one through nine are mechanical and can run the same way every period. What still needs a person: deciding what a flagged, out-of-pattern time entry actually was, and signing off on any correction before it goes into the close. Automating the sequence is what makes the close take an hour; automating the judgment calls is how a close starts producing errors nobody catches until the T5018 deadline in step five. The same discipline — automate the clock, keep a person on the decision — is what makes the annual compulsory-trade renewal in building an apprenticeship programme work the same way.