If entrepreneurs make mistakes on their T4 or T5 slips, that could end up triggering a payroll audit says Edmonton bookkeeping. If entrepreneurs go through payroll audits, not only will Canada revenue agency scrutinize their business, they will most likely incur significant penalties, as well as be inconvenienced by the audit process. This can be easily avoided, as long as entrepreneurs know how to file their T4 and T5 correctly and when.
One of the first things that entrepreneurs should understand according to Edmonton bookkeeping is what amounts are being recorded on the T4 and T5 slips. The T5 slips are for entrepreneurs to record all of the dividends that they have dispersed to all shareholders of the business. If an entrepreneur has not dispersed any dividends to shareholders, they will not need to worry about filing and T5 slip. If they have, only the dividends that have been dispersed for each of the shareholders need to be accounted for. In addition, business owners need to understand that these do not have any source deductions applied to them.
The T4 slips on the other hand, is for entrepreneurs to record all of the payroll deductions that they have withheld from their employees paychecks. Therefore, there should be a T4 slip for each employee that takes a paycheck from the corporation including business owners themselves. The source deductions that come off of employees checks include income taxes, CPP and EI. If an entrepreneur pays themselves a salary, they should understand that they need to withhold source deductions from their own paycheck as well. In addition to that, the last thing that entrepreneurs need to understand about source deductions and T4 slips is that they also have to make a contribution on behalf of the business. As a business owner, the entrepreneur must put in CPP and EI to Canada revenue agency on behalf of the business.
When an entrepreneur withholds all of these source that actions from their staff and from themselves, they need to send that amount on to Canada revenue agency. The deadline to remit these source deductions is the 15th of every month, and the month following the payroll. Therefore if an entrepreneur runs payroll in January, the source that actions are due to the Canada revenue agency by February 15. However, Edmonton bookkeeping recommends that entrepreneurs do not wait until the 15th to pay that source deductions. If they were to last day, if anything goes wrong and Canada revenue agency does not get the payment in time, and entrepreneurs facing penalties at the least, and facing payroll audit at the most. One of the best practices for entrepreneurs to follow would be to submit payroll remittances at the exact same time that an entrepreneur runs payroll. That way, entrepreneurs will never be late with their source deductions.
It can be very easy for entrepreneurs to learn how to file their T4 and T5 slips correctly, as well as how to pay their source deductions on time to avoid penalties with Canada revenue agency. Therefore, Edmonton bookkeeping says that when entrepreneurs start their business, as soon as they start either taking a salary, dispersing dividends, or hire staff for the first time they should learn how to submit payroll remittances and file their T4 and T5 slips so that they can avoid problems with Canada revenue agency.
Edmonton Bookkeeping | Problems That Can Arise From Incorrect T4 And T5 Filing
There are many things that entrepreneurs can do to ensure that they are not only filing their T4 and T5 slips correctly schism 10 bookkeeping. But what they can do to avoid triggering penalties and even payroll audits for doing it and correctly as well. As soon as an entrepreneur starts dispersing dividends, taking a salary or hiring staff, they should learn this so that they can avoid problems.
Not only is it important for entrepreneurs to be withholding source deductions from their staffs paychecks as well as their own. But they also have to ensure that they are sending that off to Canada revenue agency correctly as well. If an entrepreneur is submitting their payroll remittances to CRA prior to the 15th of every month, they may assume that there doing it correctly because they had not heard from Canada revenue agency. However, entrepreneurs will not hear if there not remitting the correct amount until they file their T4 slips.
T4 slips are actually due to be filed by the last date of February. When entrepreneurs file these, Canada revenue agency will see how much in source that actions they should have remitted, and compare that to how much they actually did. If there is a discrepancy, it can trigger penalties as well as a payroll audit. Edmonton bookkeeping says that entrepreneurs may first get a letter from Canada revenue agency explaining the discrepancy. If they are not satisfied with the answer, it will trigger a payroll audit.
Therefore, the recommendation is for entrepreneurs to prepare their T4 filing, and part to setting it off to Canada revenue agency check it against what they have already paid. If they have discovered that there has been a mistake made and they have not paid enough, they can simply send that amount off to Canada revenue agency prior to filing their T4 slip. That way, when the T4 slip is filed, they know they will have enough to cover it, and effectively avoiding any penalties as well as avoiding a payroll audit.
It can be very easy for entrepreneurs to understand what they can do to avoid a payroll audit says Edmonton bookkeeping. By filing their T4 and T5 slips on time, as well as remitting their source deductions on time. However, if an entrepreneur is not aware of these things, it could cause them to make mistakes that could end up costing their business a lot in penalties. Therefore, this should be something that an entrepreneur learns right away they start paying salary or dividends in their business.