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Gondaliya CPA

Staffing & Recruitment Tax Experts

Accountant for Staffing Agencies in Ontario and Across Canada

A staffing agency is a high-volume payroll and working-capital business, and every dollar of your service is fully HST-taxable. We charge HST correctly on the entire bill rate, the wages passed through to placed workers plus your markup, and claim the input tax credits most agencies leave behind. We apply the placement-agency deeming rule so CPP and EI are withheld on placed workers even when they invoice as self-employed, classify your workforce under CRA guide RC4110, register and reconcile your WSIB as employer of record, run high-volume T4 and T4A payroll with PD7A remittances, ROEs and ESA vacation and statutory holiday pay, accrue Ontario Employer Health Tax above the $1,000,000 exemption, and free up cash through payroll funding when clients pay net-60. When you scale, we plan the incorporation, the section 85 rollover and the $500,000 small business deduction. Flat-fee, no hourly billing, CPA Ontario, 1300+ five-star.

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AFFORDABLE Staffing Agency Accountant

A staffing or recruitment agency earns its revenue by billing clients a bill rate that bundles the wages it passes through to placed workers with its own markup, and that entire amount is fully HST-taxable, so the HST you charge and remit is large while your input tax credits on job boards, software and background checks are fully claimable. Your workforce sits on the employee-versus-contractor line, and the placement-agency deeming rule forces you to withhold CPP and EI even where a placed worker calls themselves self-employed. That is why you need a staffing and recruitment agency accountant who knows the sales-tax, payroll and classification rules cold. At Gondaliya CPA, we specialize in HST on the bill rate, high-volume payroll, worker classification, WSIB and corporate tax planning for staffing firms, providing AFFORDABLE flat-fee support that keeps you CRA-compliant and stops you paying more tax than you owe.

As a staffing agency accountant, we work with temporary and industrial staffing agencies, IT and professional recruitment firms, healthcare and light-industrial staffing businesses, and permanent-placement recruiters across Ontario, with year-round support rather than a once-a-year scramble. We tell you plainly what you can deduct, what you cannot, and where the real margin sits once payroll, WSIB and Employer Health Tax are paid.

Let us handle the numbers so you can focus on filling the roles that actually pay you.

Gondaliya CPA team - accounting and tax services for staffing agencies

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Accounting That Understands How a Staffing Agency Actually Works

Running a staffing agency comes with financial pressures a standard retail or service company never faces. Your service is fully HST-taxable on the entire bill rate, your workforce sits on the employee-versus-contractor line where the placement-agency deeming rule can make you liable for CPP and EI, WSIB names you the employer of record, Ontario now requires temp-help agencies and recruiters to be licensed, and weekly pay against net-30 or net-60 billing squeezes your cash. At Gondaliya CPA, we understand the financial reality of a staffing agency and provide practical, recruitment-focused solutions across the GTA and all of Ontario.

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HST on the Full Bill Rate

Your service is fully taxable, so HST is charged on the entire bill rate, wages plus markup, and your input tax credits are fully claimable.

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Placement-Agency Payroll

The deeming rule can force CPP and EI withholding on placed workers even when they invoice you as self-employed contractors.

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EHT & Working Capital

Employer Health Tax bites above the $1,000,000 payroll exemption, and weekly pay against net-60 billing squeezes cash.

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WSIB & Licensing

You are the employer of record for WSIB, and Ontario now requires temp-help agencies and recruiters to hold a licence.

Stay Compliant and Minimize Your Staffing Agency Tax

For a staffing agency, staying onside with CRA and WSIB and paying the least legal tax are the same job. We keep every filing on schedule while classifying your workers and billing your HST the way the rules actually require, so nothing is missed and nothing invites a reassessment.

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Worker Classification, Deeming & Licensing

Staffing work in Ontario carries obligations a generalist misses. The placement-agency deeming rule under CPP Regulations section 34 and EI Regulations section 8 forces you to withhold CPP and EI even on a “self-employed” placed worker, and CRA guide RC4110 decides employee-versus-contractor status on control, tools, chance of profit and integration. Since July 1, 2024, the Working for Workers Act requires temp-help agencies and recruiters to hold a licence. Getting classification, deeming and licensing right protects you from the retroactive assessments, penalties and interest that follow a misclassified crew.

CRA Obligations for Staffing Agencies

Staying compliant with CRA means more than one return a year. We manage HST charged on the full bill rate with input tax credits claimed on line 108, T4 and T4A slips, source deductions on the PD7A remittance, ROEs on separation, ESA vacation and statutory holiday pay, and Ontario Employer Health Tax above the $1,000,000 exemption. By monitoring the areas CRA reviews most often on payroll-heavy files, we reduce your audit exposure and keep your staffing corporation financially sound.

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Year-End Deliverables for Staffing Agencies

At year-end, a staffing corporation needs a proper trial balance and financial statements that separate bill-rate revenue, pass-through wages and markup and carry WSIB premiums, EHT, vacation-pay accrual and payroll liabilities, plus a T2 with GIFI on Schedule 125 and Schedule 100 that ties to your payroll filings. Where a lender or factoring partner is involved, you also need CPA-compiled financial statements. Our team prepares every deliverable on time and in compliance, so your file is audit-ready and financing-ready.

Accounting & Tax Experts for Staffing Agencies

Gondaliya CPA staffing agency accounting expertsGondaliya CPA staffing agency tax experts
  • AFFORDABLE + Fully Registered CPA Firm
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Why Choose Our Accounting Services for Staffing Agencies?

1
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Tax Planning — Staffing & Payroll Expertise

We keep your active income under the $500,000 Small Business Deduction at roughly 12.2% in Ontario, set the salary-and-dividend mix, plan the section 85 rollover on incorporation, and protect the $1.25M Lifetime Capital Gains Exemption on your future sale.

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Consulting — Bill-Rate HST & Payroll Bookkeeping

Our bookkeeping separates bill-rate revenue, pass-through wages and markup, charges HST on the full bill rate, claims your input tax credits, runs T4 and T4A payroll with WSIB, and reconciles each invoice to the payroll it funds.

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CRA Representation — Classification & Payroll Audit

When CRA questions your worker classification under RC4110, the placement-agency CPP and EI withholding, or your HST on the bill rate, we prepare the response, reconcile source deductions, and pursue relief on Form RC4288 where penalties came from a prior error.

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Bookkeeping — WSIB, Funding & Growth

We register and reconcile WSIB, issue ROEs on separation, accrue ESA vacation pay, and set up payroll funding for the weekly-pay-versus-net-60 crunch. We model the profit level where incorporating pays off and handle the move to a corporation.

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Staffing Agency Tax and Accounting Services in Ontario

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Corporate Tax Filing (T2) for Staffing Agencies

Professional T2 preparation with Schedule 125 reporting bill-rate revenue, Schedule 8 CCA on computers and equipment, and CRA compliance on every line.

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Bookkeeping & Accounting for Staffing Agencies

Bill-rate, pass-through-wage and markup bookkeeping with financial statements, clean records, and monthly reporting built for a high-volume staffing firm.

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Payroll Services for Staffing Agencies

High-volume T4 and T4A payroll with PD7A remittances, ROEs, ESA vacation and statutory holiday pay, WSIB, and placement-agency CPP and EI handled correctly.

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GST/HST Filing for Staffing Agencies

AFFORDABLE HST filing on the full bill rate, wages plus markup, with input tax credits claimed on job boards, software and background checks.

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Tax Planning for Staffing Agencies

Smart tax planning to protect the Small Business Deduction, set salary and dividends, manage Employer Health Tax, and time the section 85 rollover.

Corporate Catch-Up Filing for Staffing Agencies

File overdue T2 and payroll years, rebuild missing revenue and remittance records, and get back into CRA and WSIB compliance with accurate catch-up support.

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CRA Audit Resolution for Staffing Agencies

Expert support for worker-classification, placement-agency CPP and EI, and bill-rate HST audits, with source-deduction and RC4288 relief handled with confidence.

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CPA Financial Statements (Notice to Reader) for Staffing Agencies

CPA-compiled financial statements that banks and factoring partners accept for your staffing corporation, presenting receivables and working capital clearly.

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Incorporation Services for Staffing Agencies

Full incorporation including NUANS, articles, share structure, and the section 85 rollover from your unincorporated staffing business.

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Catch-Up Bookkeeping Services for Staffing Agencies

Months of unposted timesheets and factoring advances reconstructed, separating bill-rate revenue from pay-rate cost so your true margin per placement is finally visible.

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US Corporation & LLC Tax Filing for Staffing Agencies

Cross-border filings for US placements, including Forms 1120, 1120-F and 5472, keeping your agency compliant on both sides of the border.

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Voluntary Disclosure Program for Staffing Agencies

Quiet correction of unremitted source deductions and HST through a Form RC199 application, reducing penalties before CRA opens an audit of your payroll accounts.

Accounting & Tax Services Tailored for Staffing Agencies

Real, practitioner-level CPA expertise for temporary and industrial staffing agencies, IT and professional recruitment firms, healthcare and light-industrial staffing businesses, and permanent-placement recruiters across Ontario — built for how a staffing agency actually runs.

  • We prepare your T2 with GIFI, reporting the full bill-rate revenue on Schedule 125 and your balance sheet on Schedule 100, so the wages passed through to placed workers and the markup you keep are both captured exactly where CRA’s matching program expects them.
  • We claim capital cost allowance on Schedule 8 with scheduling laptops and computers in CCA Class 50 at 55% and office furniture in Class 8 at 20%, and one recruitment client recovered $6,300 of depreciation a prior preparer had buried in the wrong pool.
  • We keep active income under the $500,000 Small Business Deduction so the first half-million is taxed near the 12.2% Ontario small-business rate, and we watch the associated-corporation rules before CRA grinds that shared limit toward the higher general corporate rate.
  • We file the T2 within six months of your fiscal year-end and settle any balance by the two-month due date, so an agency clearing $250,000 of markup profit never carries the arrears interest CRA charges on a late balance owing.
  • We accrue Ontario Employer Health Tax at 1.95% on payroll above the $1,000,000 exemption inside the T2 provision, so a firm running an $1,800,000 wage bill books the roughly $15,600 owing rather than discovering the liability months after year-end.
  • We build your chart of accounts in QuickBooks Online or Xero so bill-rate revenue, pass-through wages and markup land on separate lines, giving the gross-margin-per-placement picture your T2 needs and surfacing where a $27,000 margin leak had been hiding.
  • We reconcile every client invoice against the weekly payroll run it funds, so you see true contribution per contract and keep the six years of records section 230 of the Income Tax Act requires behind each placement you bill.
  • We capture background-check, job-board and E&O insurance costs through Dext and attach them to each transaction, so a $40,000 recruiting-cost pool is fully documented instead of lost to a missing receipt when CRA asks for support.
  • We run the payroll ledger weekly, accruing ESA vacation pay at 4% and WSIB premiums as they build, so your books show the real cost behind each bill rate and month-end reporting is a clean transfer to the T2.
  • We track permanent-placement and temp-to-perm conversion fees separately from recurring contract-staffing revenue, so a $22,000 direct-hire fee is recognized in the right period and never distorts the margin trend a lender or buyer will scrutinize.
  • We run high-volume weekly pay through Wagepoint or ADP, issue T4 slips for placed employees and T4A slips for genuine subcontractors, and remit source deductions on the PD7A by the deadline so a missed remittance never triggers CRA’s 10% penalty.
  • We apply the placement-agency deeming rule under CPP Regulations section 34 and EI Regulations section 8, withholding CPP and EI on placed workers even where they invoice as self-employed, so your agency avoids the assessment for both halves plus penalties.
  • We issue Records of Employment within five days of a worker’s separation and accrue ESA vacation and statutory holiday pay, so an agency cycling 200 placements a season never draws Service Canada or Ministry of Labour complaints over late slips.
  • We register WSIB and reconcile premiums by rate group against actual placement payroll, so an agency running a $1,500,000 wage bill pays the correct premium and dodges the retroactive assessment an unregistered employer-of-record carries back two years.
  • We reconcile the T4 summary to the twelve PD7A remittances before the February 28 filing deadline, catching a $9,400 remittance shortfall before CRA does and issuing corrected slips so year-end never reopens under a payroll examination.
  • We confirm your staffing services are fully taxable and charge HST on the entire bill rate, wages plus markup, because CRA treats the whole placement fee as consideration, and billing tax on only the markup leaves a shortfall that surfaces with interest on review.
  • We register you for HST the moment taxable revenue passes the $30,000 small-supplier threshold across four quarters, so an agency scaling fast is collecting and remitting on time instead of eating 13% it forgot to charge its clients.
  • We claim input tax credits on the HST you pay on job boards, software, background checks and office costs on line 108 of your return, recovering credits a busy agency routinely leaves on the table each and every filing period.
  • We file the return so line 101 ties to the bill-rate revenue on your T2, because CRA’s matching program compares the two and a mismatch is among the fastest ways a staffing business gets selected for a desk audit.
  • We reconcile HST collected on billings against the credits claimed each period, and one temp firm recovered $18,600 of unclaimed input tax credits across two years once we rebuilt the filings the prior bookkeeper had understated.
  • We set the salary-versus-dividend mix for owners, paying enough T4 salary to build RRSP room while the balance flows as dividends, so combined tax stays near the 12.2% small-business rate rather than the personal rate that reaches 53.53%.
  • We complete the section 85 rollover on Form T2057 when you incorporate, moving goodwill, client contracts and equipment across at elected amounts, and one growing agency deferred $24,000 of tax a straight sale of those assets would have triggered.
  • We plan at least two years ahead so your shares qualify for the $1.25M Lifetime Capital Gains Exemption on qualified small business corporation shares, purifying passive assets so a future sale of the agency defers tax CRA would otherwise collect.
  • We forecast Employer Health Tax so the $1,000,000 exemption is claimed once across your associated group and the 1.95% rate applies only above it, preventing the double-counted exemption CRA reassesses when related agencies each claim the full amount.
  • We time equipment and computer purchases before your fiscal year-end so the half-year rule and the 55% Class 50 and 20% Class 8 declining-balance rates give the largest first-year deduction against a profitable staffing year.
  • We reconstruct bill-rate revenue and pass-through wages from bank deposits, client invoices and payroll records where no bookkeeping exists across your unfiled years, so CRA cannot arbitrarily assess your agency on its own estimate and overcharge you on tax.
  • Late filing costs 5% of the balance owing plus 1% per month up to twelve months, so we file your oldest unfiled T2 first to stop the penalty compounding and limit the arrears interest CRA charges your corporation.
  • We prepare the unfiled T4 and T4A slips and the PD7A reconciliations for every year you paid placed workers, filing them with the catch-up returns so CRA does not stack the per-slip and late-remittance penalties on top of the late T2.
  • We register WSIB retroactively and reconcile the premiums owed on prior-year placement payroll, so an agency that ran wages without coverage clears a back assessment before it grows with interest and blocks new client contracts requiring clearance.
  • We rebuild the undepreciated capital cost pools across the unfiled years so missed CCA on Class 50 computers and Class 8 furniture is recovered, and one agency clawed back $7,200 of deductions instead of leaving them with CRA.
  • When CRA challenges whether placed workers are employees or contractors, we build the RC4110 analysis on control, tools, chance of profit and integration, defending the classification before a reassessment for both halves of CPP and EI plus penalties lands.
  • Where CRA applies the placement-agency deeming rule to workers you paid as contractors, we quantify the exposure and negotiate the assessment, and one industrial-staffing firm recovered $18,400 of misclassified CPP and EI exposure through a corrected filing rather than a full penalty.
  • We answer a source-deduction payroll audit with the T4, T4A and PD7A records in one package inside the 30-day query deadline, because a remittance disallowed for missing support cannot be restored later at the objection stage.
  • We defend your HST position when CRA questions the tax charged on the full bill rate, showing the placement fee is fully taxable and the input tax credits claimed are supported, so nothing is assessed back to you with interest.
  • We file the Notice of Objection on Form T400A within 90 days of a reassessment and pursue taxpayer relief on Form RC4288 where a prior accountant’s error caused the penalties, protecting your right to the Tax Court.
  • We prepare CSRS 4200 compilation engagement financial statements, the Notice to Reader a bank requires across two fiscal years before it approves the operating line a staffing agency needs to fund weekly payroll while clients pay on net-60 terms.
  • Your compiled statement of financial position presents receivables, WSIB payable and vacation-pay accrual, giving a lender the working-capital picture a bare T2 cannot, and one agency freed $45,000 of tied-up cash once the statements unlocked its payroll facility.
  • We build the statement of operations with bill-rate revenue, pass-through wages and markup classified consistently across two years and tied to the T2 filed with CRA, so a factoring partner approves the facility rather than declining on reclassified noise.
  • The CSRS 4200 communication discloses that no audit or review was performed and sets out the basis of accounting and owner withdrawals, without which a bank and the Business Development Bank of Canada reject a staffing file.
  • We deliver the compiled statements within 30 days of receiving your records and the year’s T2 figures, because a staffing agency’s financing approval collapses when the lender’s conditional offer expires before the accountant produces the file.
  • We incorporate your business under the Ontario Business Corporations Act, giving you limited liability and the roughly 12.2% Ontario small-business rate on active income, so an agency earning more than the owner draws stops paying tax at the 53.53% personal rate.
  • We complete the section 85 rollover on Form T2057, transferring your goodwill, client contracts and equipment into the corporation at elected amounts, deferring the capital gain and recapture a straight sale of those assets would trigger for CRA.
  • We open the corporation’s CRA Business Number, payroll and HST accounts within the first 30 days, set the PD7A remittance schedule, and close the old accounts so your agency never remits the same bill-rate revenue twice.
  • We complete WSIB registration before the first placement starts, because the agency is the employer of record from day one, and an unregistered firm faces retroactive premiums going back two years plus penalties that immediate registration avoids.
  • We structure the share classes and set the first fiscal year-end up to 53 weeks out so the first T2 and CRA balance-due date defer to save cash, and one incorporating agency deferred $11,000 of tax into the following year.
  • We reconstruct months of unposted timesheets and invoices, posting each placement so that bill-rate revenue billed to clients is separated cleanly from the pay-rate cost paid to workers, revealing the gross margin your agency actually earns.
  • We rebuild the payroll subledger for your high-volume temporary workforce, matching every pay run against source deductions, WSIB premiums and Ontario EHT, so the wages expensed reconcile exactly to what was remitted to CRA each period.
  • We catch up the HST returns your staffing services owe, because placement fees are taxable supplies, and we recover input tax credits on subcontractor and software costs that unfiled periods had left sitting unclaimed on the table.
  • We reconcile the accounts receivable ledger against factoring advances and client remittances, clearing the stale balances and duplicate postings that hide whether a slow-paying client actually owes your agency roughly $40,000 or has already settled.
  • We review how each worker was booked, flagging placements coded as subcontractors who function as employees, so the reconstructed books reflect the true payroll liability before CRA reclassifies them and assesses back deductions with interest.
  • We file Form 1120 for your US C-corporation and Form 1120-F where a Canadian agency places workers stateside, reporting the effectively connected income that American client contracts generate and claiming treaty positions that stop the same margin being taxed twice.
  • We prepare Form 5472 for every reportable transaction between your Canadian parent and its US placement entity, because each missed disclosure carries a $25,000 penalty that dwarfs the tax on the intercompany staffing fees being reported.
  • We determine whether your recruiters travelling to client sites create a US permanent establishment, then structure the LLC or corporation so payroll withholding and state nexus are handled before a single temp worker is placed across the border.
  • We coordinate the US return with your Canadian T2, applying foreign tax credits so income earned placing workers in American facilities is not taxed fully in both countries, protecting the thin spread between bill rate and pay rate.
  • We register the US entity for the relevant state employment and sales taxes tied to staffing supply, keeping multi-state placements compliant so your agency can bid on American contracts without an unexpected assessment erasing the engagement’s profit.
  • We file the Form RC199 voluntary disclosure that corrects source deductions your agency withheld from temporary workers but never remitted, presenting the shortfall to CRA before an audit begins so gross negligence penalties are waived and only interest remains.
  • We disclose the HST your agency charged clients on taxable placement services but failed to file, packaging several unremitted periods into one application so the collected tax is paid over with penalty relief rather than assessed with full gross-negligence penalties.
  • We assemble the payroll records, T4 summaries and bank deposits that prove the disclosure is voluntary and complete, meeting every CRA condition so a lapse involving perhaps $60,000 of unremitted deductions is resolved without prosecution or director liability.
  • We correct misclassified workers through the program, reporting the employer source deductions that should have applied to contractors who were really employees, so your agency settles the reassessment on its own terms instead of CRA’s after a trust examination.
  • We negotiate the payment arrangement once the disclosure is accepted, spreading the remittance of back deductions and HST across manageable instalments so clearing the liability does not starve the working capital your agency needs to make payroll.

Staffing Agency Tax & Payroll Check

Six quick questions on your bill-rate HST, worker classification, temp-help licence, Employer Health Tax, payroll funding and whether it is time to incorporate. No fee shown.

1. Are you charging HST on the full bill rate, wages plus markup?

2. Are your placed workers classified correctly as T4 employees or T4A contractors?

3. Do you hold an Ontario temp-help agency or recruiter licence?

4. Is your Ontario payroll approaching or above the $1,000,000 EHT exemption?

5. Does the weekly-pay-versus-net-60 crunch strain your cash or need payroll funding?

6. Is your staffing agency incorporated yet?

Free CPA Consultation for Staffing Agencies

Case Studies: Staffing Agency Accounting & Tax

Toronto Industrial Staffing Agency — Placement Deeming & Bill-Rate HST

The problem: A Toronto industrial staffing agency was paying its placed warehouse and general-labour workers as “contractors” with no CPP or EI withheld, and was billing HST on only its markup rather than the full bill rate. Under the placement-agency deeming rule the agency was liable to withhold CPP and EI anyway, so the misclassification was building an exposure to both halves plus penalties, and the HST short-billing left a growing shortfall that CRA would have assessed with interest on any review of the file.

What we did: We applied the placement-agency deeming rule under CPP Regulations section 34 and EI Regulations section 8, corrected the withholdings and moved the workers onto proper T4 payroll, then rebuilt the HST filings to charge tax on the entire bill rate and claim the input tax credits that had been missed.

The result:

  • Recovered and avoided $18,400 of misclassified CPP and EI exposure
  • Bill-rate HST corrected before a CRA reassessment
  • Input tax credits recovered on job boards and background checks

Mississauga IT Recruitment Agency — Incorporation & EHT

The problem: A Mississauga IT recruitment agency was still a sole proprietor, so roughly $260,000 of profit on strong placement markups was taxed at the owner’s top personal rate reaching 53.53%, with no salary-and-dividend split available. The owner had also ignored Employer Health Tax entirely as the contract-staffing payroll climbed past the $1,000,000 exemption, leaving an under-accrued EHT liability building quietly on the Ontario payroll every single month with no provision set aside anywhere on the books.

What we did: We incorporated the agency and moved the assets across on a section 85 rollover on Form T2057, applied the $500,000 Small Business Deduction to bring the first half-million near the 12.2% Ontario rate, and set up EHT accruals at 1.95% above the $1,000,000 exemption with a monthly provision.

The result:

  • Cut the combined tax bill materially at the 12.2% small-business rate
  • Surfaced a $27,000 EHT under-accrual before it compounded
  • Salary-and-dividend mix now planned each year

Ottawa Healthcare Staffing Agency — Payroll Funding, WSIB & Remittances

The problem: An Ottawa healthcare staffing agency paid its placed nurses and PSWs weekly while its hospital and clinic clients paid on net-60 terms, so the working-capital gap left it short of cash to make payroll, and it had fallen behind on its PD7A source-deduction remittances. The late remittances were drawing CRA penalties on every cycle, the WSIB account was not properly reconciled against the growing care payroll, and ROEs were going out late whenever a placement ended.

What we did: We set up payroll funding to bridge the weekly-pay-versus-net-60 gap, registered and reconciled WSIB by rate group, and built the PD7A remittance and ROE workflow in QuickBooks so each pay cycle ran on time, the source deductions were remitted by the monthly deadline, and the slips were issued within five days of every separation.

The result:

  • Freed working capital to cover weekly payroll without stress
  • WSIB registered and reconciled by rate group
  • Zero late-remittance penalties since the cleanup

Our Simple Process

How We Work With Staffing Agencies

Know Exact Fees within 2 Minutes NOW

Our clear, efficient process ensures every step is transparent, building trust and long-term client relationships.

Here’s a simplified process approach:
Step 1

Kickoff (Document Request)

Collect prior T2 returns, client contracts and bill-rate schedules, payroll and T4/T4A records, WSIB account, temp-help licence, contractor agreements, and bank statements.

Step 2

First 30 Days (Cleanup & Setup)

Set up QuickBooks Online or Xero, separate bill-rate revenue from pass-through wages and markup, confirm your HST and classification position, and configure payroll, WSIB and PD7A tracking.

Step 3

Monthly Close

Weekly payroll and remittances, receipt capture, WSIB and vacation-pay accrual, HST on the bill rate, and invoice-to-payroll reconciliation.

Step 4

Quarterly Planning Review

Salary and dividend mix, worker-classification check, EHT and ITC review, payroll-funding position, and incorporation break-even.

Step 5

Year-End Close & T2 Filing

Trial balance, financial statements, T2 with GIFI, T4 and T4A summaries, EHT reconciliation, and CRA preparation.

Get Your Staffing Agency Taxes Done Right Today

Transparent Pricing for Staffing Agencies

Affordable Pricing for Staffing Agencies

Know Exact Fees within 2 Minutes NOW

We believe in clear, upfront pricing so you know exactly what to expect. All fees include HST.

  • Tax Preparation (Corporation) — From $400
  • Tax Return Filing (Corporation) — From $400
  • Tax Compliance Audit — FREE CRA audit support for our clients
  • Tax Strategy — FREE for our clients
  • Accounting Base Plan — From $100 per month
  • Bookkeeping Management — Free for our Accounting clients
  • Financial Reporting — Free for our Accounting clients
  • Business Formation — Flat $35
  • Incorporation Process — Flat $35
  • Entity Setup Assistance — Flat $35
  • Full-Service Payroll — From $125 per month

Payment is by Interac e-Transfer to info@gondaliyacpa.ca only. Security question: Not Applicable, as auto-deposit is enabled.

Meet Your Lead Staffing Agency Accountant

Meet your lead staffing agency accountant. As your payroll and corporate tax adviser, you deal with the same two people every year.

Sharad Gondaliya CPA

Sharad Gondaliya, CPA

Principal

Bio

647-212-9559
sharad@gondaliyacpa.ca

Vandana Goel CPA

Vandana Goel, CPA

Accounting Specialist

Bio

647-250-0242
vandana@gondaliyacpa.ca

What Our Clients Say

1300+ five-star reviews from staffing agencies and small-business owners across Ontario and Canada.

Serving Staffing Agencies Across Ontario

Our CPA team provides specialized accounting and tax solutions for staffing and recruitment agencies throughout Ontario. We understand how bill-rate revenue, pass-through wages, markup, payroll and WSIB actually flow through a staffing firm, what CRA looks at on a worker-classification file, and where the real margin sits once payroll and Employer Health Tax are paid.

Toronto (ON)

55 Queen St E Ste 1205, Toronto, ON M5C 1R6, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Mississauga (ON)

5373 Bullrush Dr, Mississauga, ON, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Brampton (ON)

4 Starhill Crescent, Brampton, ON L6R 2P9, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Scarborough (ON)

24 Clementine Square, Scarborough, ON M1G 2V7, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Vaughan (ON)

19 Cabinet Crescent, Woodbridge, ON L4L 6H9, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Oshawa (ON)

210 Durham St, Oshawa, ON L1J 5R3, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Ottawa (ON)

2090 Neepawa Ave a314, Ottawa, ON K2A 3L6, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Etobicoke (ON)

60 Stevenson Rd #1601, Etobicoke, ON M9V 2B4, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Hamilton (ON)

70 Starling Dr, Hamilton, ON L9A 0C5, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Guelph (ON)

1155 Gordon St, Guelph, ON N1L 1S8, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Windsor (ON)

4387 Guppy Ct, Windsor, ON N9G 2N8, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

North York (ON)

150 Graydon Hall Dr #912, North York, ON M3A 3B2, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Staffing Agency Accounting & Tax FAQs

Should I incorporate my staffing agency?
Incorporating gives you limited liability, a 12.2% Ontario combined rate on the first $500,000 of active business income, the ability to split income between salary and dividends, and access to the $1.25M Lifetime Capital Gains Exemption on a future sale, none of which a sole proprietorship offers. As a sole proprietor your staffing profit is taxed at your full personal rate, reaching 53.53% in Ontario, whether you draw it or leave it in the business. The decision usually turns on whether you consistently earn more than you need to withdraw, because that surplus is what a corporation lets you defer. Incorporation also brings annual T2 filing, minute book maintenance and higher compliance cost, so it is not free. We model the break-even for your actual numbers rather than applying a rule of thumb. When the answer is yes, we handle the incorporation and the section 85 rollover of your goodwill, client contracts and equipment on Form T2057. When it is not yet, we say so and revisit it next year.
Do staffing agencies charge HST on the full bill rate?
Yes. Staffing and placement services are fully taxable, so you charge HST on the entire bill rate, the wages you pass through to placed workers plus your markup, not on the markup alone. CRA treats the whole placement fee as the consideration for a taxable supply. The good news is that your input tax credits on job boards, software, background checks and office costs are fully claimable, which a purely exempt business could never do. Billing HST on only the markup is a common and costly error that leaves a shortfall CRA assesses with interest on review. We set your invoicing and filings up to charge and recover the tax correctly.
Are temp workers employees or contractors?
It depends on the working relationship, decided under CRA guide RC4110 on control, ownership of tools, chance of profit and risk of loss, and integration into your business. Many placed workers who work set shifts under a client’s direction are employees, not contractors. Getting this wrong is expensive: if CRA reclassifies a “contractor” as an employee, your agency becomes liable for both halves of CPP and EI plus penalties and interest. On top of that, the placement-agency deeming rule can require CPP and EI withholding regardless. We assess each role against the RC4110 factors and set up the correct T4 or T4A treatment.
How does placement-agency CPP and EI withholding work?
Under the placement-agency deeming rule in CPP Regulations section 34 and EI Regulations section 8, an agency that places workers with clients must withhold and remit CPP and EI on what it pays those workers, even if the worker is otherwise self-employed. So calling your placed workers “contractors” does not remove the obligation. Ignoring it builds an exposure to both halves of CPP and EI plus penalties and interest, which surfaces on a payroll audit. We apply the deeming rule, withhold correctly, and remit on the PD7A so your agency is not assessed later.
Do I need a temp help agency licence in Ontario?
Yes, in most cases. Since July 1, 2024, temporary help agencies and recruiters operating in Ontario must hold a licence under the Working for Workers Act, and it is illegal for a client to knowingly use an unlicensed agency. The licence must be renewed and requires an irrevocable letter of credit as security. Operating without one exposes you to significant penalties and lost contracts. We confirm your licensing position and keep the requirement on your compliance calendar alongside your CRA and WSIB obligations so nothing lapses.
Does my staffing agency pay Employer Health Tax?
Yes, once your Ontario payroll passes the exemption. Ontario Employer Health Tax applies at 1.95% on total Ontario remuneration above the $1,000,000 annual exemption, and the exemption is shared once across an associated group of employers. Because a staffing agency’s payroll is large, EHT can become a material cost as you scale, so a firm with an $1,800,000 wage bill owes roughly $15,600. We accrue EHT month by month, claim the exemption once across related agencies, and build the provision into your T2 so it never surprises you at year-end.
Do I need WSIB for my placed workers?
Yes. For temporary help and staffing arrangements, WSIB names the agency as the employer of record, so you must register and pay premiums on the wages of the workers you place, set by rate group and payroll. Running placed workers without coverage builds a retroactive exposure that WSIB can assess back two years plus penalties, and it can block you from winning client contracts that require a clearance certificate. We register your agency, place you in the correct rate group, reconcile premiums against actual payroll, and keep your clearance current.
Do I issue T4 or T4A to placed workers?
Employee placed workers receive a T4 with income tax, CPP and EI withheld and remitted on the PD7A, while genuine independent subcontractors receive a T4A. Because of the placement-agency deeming rule and the RC4110 factors, most placed workers who work under a client’s direction are employees on T4. Misclassifying employees as T4A contractors is a common and costly error that a CRA payroll audit unwinds with penalties. We assess each worker, set up the correct slip, and handle the withholding, remittances and year-end T4 and T4A summaries.
How do I handle payroll funding and bad debt?
Staffing is a working-capital business: you pay placed workers weekly while clients pay on net-30 or net-60 terms, so the cash gap can leave you short to make payroll. Payroll funding, or invoice factoring, advances cash against your unpaid client invoices to bridge that gap, and we set it up and account for the financing cost correctly. Where a client does not pay, the receivable can be written off as a bad debt under section 20(1)(p) of the Income Tax Act, and the related HST previously remitted can generally be recovered as a bad-debt adjustment. We manage both so cash and tax line up.
Can I claim ITCs as a staffing agency?
Yes. Because your staffing services are fully taxable, you can claim input tax credits for the HST you pay on the inputs used in your business, such as job-board subscriptions, applicant-tracking and payroll software, background checks, office rent, professional fees and equipment. You claim them on line 108 of your GST/HST return and net them against the HST you collected on the bill rate. Many busy agencies leave real money on the table by not capturing these credits. We set up your bookkeeping so every eligible credit is captured and defensible on a CRA review.
How much corporate tax does a staffing agency pay in Ontario?
An incorporated staffing agency files a T2 and pays roughly 12.2% in Ontario on the first $500,000 of active income under the Small Business Deduction, with the balance taxed at the general corporate rate. Because your revenue is fully taxable, you charge HST on the bill rate and recover input tax credits, so the tax picture turns on payroll, WSIB, Employer Health Tax and the salary-versus-dividend mix. If you are unincorporated, the same profit lands on your personal return at your personal rate, up to 53.53%, instead. We plan the mix to keep combined tax as low as the rules allow.
What can a staffing agency write off?
Placed-worker wages, employer CPP and EI, WSIB premiums, Employer Health Tax, ESA vacation and statutory holiday pay, recruiter commissions, job-board subscriptions, applicant-tracking and payroll software, background-check costs, E&O insurance, payroll-funding costs, bad debts under section 20(1)(p), office rent and professional fees are all deductible. Your computers and laptops depreciate in CCA Class 50 at 55% and office furniture in Class 8 at 20%. Because your revenue is taxable, you recover the HST on most of these inputs as input tax credits, so the deduction is the net-of-HST cost. We make sure every legitimate cost is claimed.
How do I run payroll for a staffing agency, and what software is best?
You run each pay cycle, often weekly, with income tax, CPP and EI withheld from employee placed workers, remit the source deductions to CRA on the PD7A by the deadline, accrue ESA vacation and statutory holiday pay, pay WSIB and Employer Health Tax, and issue ROEs within five days when a placement ends. Placed workers are caught by the placement-agency deeming rule, so CPP and EI come off even where the worker is “self-employed.” At year-end you file T4 and T4A summaries. For software, QuickBooks Online or Xero for the general ledger, Wagepoint or ADP for high-volume payroll, and a back-office platform such as Bullhorn or Avionte for bill-rate and margin tracking. We set it up and run the whole cycle on time.

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Staffing Agency Accounting & Tax Done Right.

T2 filing, HST on the full bill rate with input tax credits, placement-agency CPP and EI, worker classification, WSIB, Employer Health Tax, T4 and T4A payroll with PD7A and ROEs, payroll funding and incorporation under one roof. AFFORDABLE flat fees, no hourly billing. Licensed CPA Ontario. 1300+ five-star reviews. 30-Day Money-Back Guarantee.



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