Convenience store payroll: family wages, owner pay, and part-timers done right

Put family on payroll like you would hire a stranger

Wages to a spouse or child are fully deductible when two things are true: the work actually happens, and the pay matches what a stranger would get for the same shifts. CRA tests this line on a T2 harder than almost any other, so the defence is documentation you build as you go — a short written list of duties, the person's shifts on the same schedule as everyone else, hours in the same time records, and pay moving from the business bank account on the same run that pays the part-timers. What fails review is the year-end round number: a $30,000 cheque to a spouse in December with no timesheet behind it. What passes is boring: $18 an hour, every two weeks, T4 in February, exactly like any other cashier.

Kids can be on payroll too, with real jobs — stocking, cash, receiving counts. Withhold tax normally; CPP only begins the month after they turn 18.

The EI question nobody asks until there is a claim

Employment of a relative is insurable only when its terms are substantially similar to what an arm's-length employee would accept — same wage, same hours, same treatment. Anyone who controls more than 40 per cent of the voting shares is never insurable at all. Guessing wrong costs money in both directions: stores that remit EI for years on a spouse who was never insurable can only recover a few years of premiums, while a spouse laid off after a store sale can be denied benefits that were never actually available. We do not guess — we file for a CPP/EI ruling and set the payroll file to match the answer, once.

Paying yourself for an eighty-hour week

The corporation will never pay you overtime, so owner pay is a design decision, not a reward for hours. The failure mode we see most is no decision at all — living out of the till and the debit card, then asking the accountant to characterize a year of withdrawals in March. That reliably produces the worst result: a shareholder-loan balance that has to be cleared, bookkeeping archaeology, and zero planning value. The deliberate options look like this:

A c-store already lives under extra scrutiny because of cash, lottery, and tobacco — the owner's own pay should be the cleanest line in the business, not the murkiest.

The part-timers who cover the evenings

Beyond family, most stores run two or three part-timers on evenings and weekends, and the standard Ontario kit applies without drama: at least the general minimum wage for adult staff, the three-hour minimum when someone is sent home early from a longer scheduled shift, 4 per cent vacation pay added to each cheque under a written agreement, and public-holiday pay that prorates itself through the four-weeks-divided-by-twenty formula. Register with WSIB when you first hire, and resist ever settling a till shortage through a paycheque — wage deductions for shortages are barred where anyone else had register access, which on a shared till is always.

A small payroll should run itself

Four or five people on a pay run is a solved problem when the plumbing is right: a cloud runner like Wagepoint or QuickBooks Online Payroll, direct deposit, remittances by the 15th — or quarterly, if you are a new employer averaging under $1,000 a month in withholdings with a clean record — T4s by the end of February, and the odd ROE when a part-timer moves on. The Employer Health Tax never touches a single store under the $1 million exemption, but owners of two or three stores in associated corporations share one exemption and should check the combined total. Daily till, lottery, and tobacco reconciliations feed the same file — that side lives in our convenience store bookkeeping — and if the shareholder behind the store is a US citizen, the owner-pay decision has a second tax return attached: see our cross-border guide for c-store owners.

Source: CRA — Payroll.