Hiring your first employee as a Financial Planner or Fiduciary Financial Advisor is a significant milestone for your firm.
However, it comes with various compliance obligations that you need to understand and fulfill to avoid legal pitfalls.
This guide will walk you through the key compliance requirements to ensure a smooth and lawful hiring process.
Understand Employment Laws
Federal and Provincial Laws
Familiarize yourself with federal and provincial employment laws.
These regulations cover minimum wage, overtime pay, worker classification, anti-discrimination policies, and more.
The Canada Labour Code and the Employment Standards Act (for your respective province) are essential starting points.
Financial Sector-Specific Regulations
Understand industry-specific regulations that apply to financial planners, including those from the Canadian Securities Administrators (CSA) and the Financial Planning Standards Council (FPSC).
Ensure your firm adheres to compliance standards set by these regulatory bodies.
Worker Classification
Correctly classify your worker as either an employee or an independent contractor.
Misclassification can lead to penalties and back taxes.
The Canada Revenue Agency (CRA) provides guidelines to help determine the appropriate classification.
Obtain a Business Number (BN)
Register for a BN
Before hiring an employee, you need to obtain a Business Number (BN) from the CRA.
This unique number is used for tax reporting purposes.
You can apply for a BN online through the CRA website.
Set Up Payroll System
Payroll Taxes
Set up a payroll system to manage employee wages, taxes, and deductions.
You are responsible for withholding federal and provincial income taxes, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from your employee's paycheck.
Payroll Schedule
Establish a payroll schedule that complies with provincial regulations.
Ensure timely and accurate payment of wages to your employee.
Professional Payroll Services
Consider using professional payroll services tailored for financial firms to ensure accuracy and compliance.
Employee Forms and Documentation
TD1 Form
Have your employee complete federal and provincial TD1 forms to determine the amount of income tax to withhold from their paycheck.
Employment Agreement
Draft a comprehensive employment agreement that includes specific clauses related to confidentiality, non-compete, and compliance with CSA and FPSC regulations.
Record of Employment (ROE)
Complete a Record of Employment (ROE) for each employee when they leave the job.
Register for Workplace Safety Insurance
WSIB Registration
Register for Workplace Safety and Insurance Board (WSIB) coverage (or your provincial equivalent) to cover medical expenses and lost wages if your employee gets injured on the job.
Compliance
Ensure your coverage meets provincial requirements and maintain proof of insurance to avoid penalties.
Post Required Notices
Labour Law Posters
Display required labour law posters in a visible location within your workplace.
These posters inform employees of their rights and protections under federal and provincial laws.
Regular Updates
Keep these posters up-to-date with the latest regulations to remain compliant.
Develop Employee Handbook
Company Policies
Create an employee handbook outlining company policies, procedures, and expectations.
Include sections on workplace conduct, anti-discrimination, and harassment policies.
Compliance Policies
Incorporate compliance-related policies such as leave entitlements, health and safety guidelines, and reporting procedures for workplace issues.
Financial Planning-Specific Policies
Develop policies specific to the financial planning sector, such as ethics guidelines, continuing education requirements, and client confidentiality rules.
Report New Hires
Provincial Reporting
Report your new hire to your provincial new hire reporting agency, if applicable.
Federal Requirements
Ensure compliance with any additional federal reporting requirements for new hires.
Provide Mandatory Benefits
Health Insurance
Depending on the size of your firm, you may be required to offer health insurance to your employees under provincial laws.
Retirement Plans
Consider offering retirement plans, such as a Registered Retirement Savings Plan (RRSP), to attract and retain top talent.
Ensure that your plans comply with the Income Tax Act and relevant regulations.
Stay Updated on Compliance Changes
Continuous Education
Stay informed about changes in employment laws and compliance requirements.
Regularly review legal resources and consult with HR professionals or legal advisors.
Training
Provide ongoing training for yourself and your management team on compliance-related topics to ensure your firm remains up-to-date with current regulations.
Financial Planning-Specific Training
Ensure your staff receive training specific to financial planning, including updates on CSA and FPSC regulations, investment advice standards, and ethical practices.
Get Started Today
Ready to hire your first employee and ensure compliance with all regulations?
Contact us today to learn how we can help you navigate the complexities of hiring and compliance.
Whether you need assistance with payroll setup, employee documentation, or compliance training, we’re here to help you succeed.
See our membership pricing plan.
Let’s build a compliant and successful team that drives your firm’s growth!