There are certain protocols that entrepreneurs should follow in order to file their T4 and T5 slips properly says Edmonton bookkeeping. To make mistakes on this, could end up costing entrepreneurs money, by incurring penalties. Not only that, but if they understand the purpose of the T4 and T5 slips, that can help them avoid triggering a payroll audit as well. Since 50% of all entrepreneurs fail in business by year five, and 29% of those failed entrepreneurs say that the reason why they have failed is because they ran out of money. This is an extremely important thing for entrepreneurs to learn in their business.
The first thing that entrepreneurs should learn when it comes to their T4 and T5 slips, is what information the slips are recording. Edmonton bookkeeping says that a T4 slip takes note of all of the payroll deductions that an entrepreneur has withheld from all salaried employees paychecks. This includes business owners and themselves, if they are taking a salary.
T5 slips on the other hand are for recording the dividends that all shareholders have taken from the earnings of the corporation. If the shareholders have not taken any earnings of the corporation, or if the corporation has not yet earned any profit, this will not result in a T5 slip being generated.
Once an entrepreneur understands the information on the T4 and T5 slip, they should also understand that they need to be filed at the same time every year. Edmonton bookkeeping says that the filing deadline for T4 and T5 slips is the last day in February. This is to ensure that their staff have all of the paperwork required to do their personal taxes, which are due at the end of April. Therefore, with how important it is to ensure that everyone has the slips they need to file their personal taxes, not filing on time results in penalties. Edmonton bookkeeping says that this penalty is a dollar amount per employee, for every day that an entrepreneur is late filing their T4 and T5 slips. This can add up quickly.
Because the T4 slips take note of all of the source deductions that an entrepreneur has withheld from their employees paychecks, Edmonton bookkeeping says it is very important that entrepreneurs are calculating the correct amount, and paying it on time as well. If they do not end up doing this accurately, they could trigger payroll audits as well as additional penalties. The deadline for submitting source deductions is the fifteenth of the month following the pay date. For example is Edmonton bookkeeping, if an entrepreneur runs payroll in March, the source deductions are due at Canada revenue agency by April 15.
It is extremely important that entrepreneurs learn this information as soon as they start paying salary to themselves or employees, or taking dividends out of the company. By learning this early on, entrepreneurs can avoid triggering penalties and payroll audits that could negatively impact their business.
Edmonton Bookkeeping | Best Practices When Filing T4 And T5 Slips
it is very important that entrepreneurs understand how to avoid triggering a payroll audit as well as penalties when it comes to source deductions says Edmonton bookkeeping. When an entrepreneur files there T4 slip, Canada revenue agency will be able to tell how much they should have paid in source deductions. If they have paid to little, the will incur penalties, and could be faced with a payroll audit, which means Canada revenue agency will start scrutinizing their business. This is not only time-consuming, but it can end in the CRA issuing even more penalties to business owner. However, there some easy things that entrepreneurs can keep in mind to ensure the avoid this scenario.
One of the first things that entrepreneurs should know, is the deadline for submitting their payroll remittances to Canada revenue agency. Edmonton bookkeeping said the deadline is the fifteenth of every month, in the month following pay date. However, the recommendation is for entrepreneurs to not it until the fifteenth of the month to pay source deductions. In fact, the best practices would be for entrepreneurs to simply remit source deductions at the same time that they run payroll. The reason why this is so effective, is because not only does it save time, because business owners will not have to do the source deductions calculation a second time, and chance getting it wrong. But also, by doing it this way, they will never be late in remitting source that actions.
When an entrepreneur is preparing their T4 filing, even if they have been very diligent in paying the correct amount of source deductions, Edmonton bookkeeping recommends that the review the amount that they should have paid against what they have already submitted to Canada revenue agency. If they have inadvertently underpaid, they have until January 15 of every year to remit the correct amount of source deductions without incurring a penalty. By checking this prior to filing their T4 slips, business owners can avoid incurring penalties and potentially triggering payroll audits.
However, if an entrepreneur has not checked this, and they have underpaid they should expect to see a letter from Canada revenue agency says Edmonton bookkeeping. This letter will ask entrepreneurs to explain the difference. They can either pay the difference, or send a letter back explaining why the underpaid. If Canada revenue agency is not satisfied with their reply, it will trigger a payroll audit which will end up with an auditor asking to review all of the pay stubs in the business, all of the bank statements and PD seven A reports. The auditors job will be looking to see where the source deductions that should have been remitted went.
It is not difficult for entrepreneurs to learn what they need to do in order to avoid triggering payroll audits and penalties when it comes to source deductions in their T4 and T5 slips. However this is easy says Edmonton bookkeeping, by not finding out I had of time what entrepreneurs need to do, puts them at risk. By learning these simple rules, entrepreneurs can ensure that they are doing the right things for their business.