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There are many legislated activities and reporting responsibilities required when a registered business ceases operation. These Payroll Best Practices Guidelines are designed to help guide the processes and procedures you need to follow to ensure compliance. The requirements and activities are summarized in the list below.

Note: Every business is different and these guidelines are therefore not exhaustive for each situation. We strongly urge every organization in these circumstances to retain the counsel of a professional advisory service that is well versed in ceasing operations in your jurisdiction(s); the experience they bring to this effort could prove invaluable.

Step 1:

Meet with active employees or provide communication memo.

  • Provide reasons for closing:
    • Bankruptcy/Insolvency
    • Business sold
    • Moving payroll to another country

Step 2:

Notify inactive or former employees.

  • Salary continuance recipients
  • Maternity and parental leave
  • Employees receiving STD and LTD benefits
  • Retirees and pensioners
  • Employee Self Serve – access after termination

Step 3:

Determine final payments.

  • Working notice or pay in lieu of notice
  • Vacation pay (time owing and banked vacation)
  • Banked overtime
  • Substitute holiday (or payout)
  • Legislated severance (federal and ON only)
  • Retiring allowance

Step 4:

Remit all C/QPP contributions, EI or QPIP premiums, and income tax deductions withheld for the former employees within seven days of the day your business ends.

Step 5:

Calculate the pension adjustment (PA) that applies to your former employees who accrued benefits for the year under your registered pension plan (RPP) or deferred profit sharing plan (DPSP).

For more information on how to calculate pension adjustments, see Guide T4084, Pension Adjustment Guide.

Step 6:

You may wish to confirm the labour standards of your employee’s province or territory of employment to ensure that you have met their requirements for termination.

Step 7:

Issue a Record of Employment (ROE) for each former employee within five calendar days after the end of the pay period in which an employee’s interruption of earnings occurs to do so.

Step 8:

Fill out and file all T4 or T4A slips and summaries using electronic filing methods or on paper, and send them to the CRA within 30 days from the date your business ends. Give copies of the T4 or T4A slips to your former employees.

Step 9:

Cancel the business number and all related CRA program accounts after the final returns and all amounts owing have been processed. To close your payroll program account, you can use the “Request to close payroll account” service in My Business Account. An authorized representative can use this service through Represent a Client.

Step 10:

Fill out and file all RL-1 slips and summaries and submit by the 30th day after the day on which you stop operating your business.

Step 11:


  • Payroll software provider
  • Bank
  • Courts of existing garnishment orders
  • Union
  • Benefit/Pension provider

Step 12:

Notify government agencies covered above.

Step 13:

Closing financial statements:

  • Balance General Ledger
  • Complete all third-party remittances
  • Complete all payroll balancing
  • Consult internal/external auditors


  • Make announcement to employees.
  • Inform customers/clients and suppliers/vendors.
  • Send notice to government agencies.
  • Send notice to payroll service provider.


  • Report corporate dissolution.
  • Report shareholders/partners shares.
  • Cancel business registration for sole proprietorship and partnership.
  • Cancel permits and licenses.
  • Cancel business accounts and credit cards.
  • Cancel insurance policies.
  • Cancel rent or lease.
  • Notify creditors and service providers.
  • Settle business debt.
  • Collect accounts receivable.
  • Cancel bank account.
  • Cancel insurance policies.
  • Issue final pay.

Canadian Payroll Association

This information is an excerpt from the Canadian Payroll Association‘s Dialogue Magazine, which is provided free to its membership. One more great reason to join!

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