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It is extremely necessary for entrepreneurs to learn early on in their business all of the various strategies that they need to be aware of to avoid triggering a payroll audit in their business says Edmonton bookkeeping. The reason why, is because triggering a payroll audit can not only be extremely disruptive to an entrepreneurs business, but it can also end up triggering even more teas that could make it very difficult for an entrepreneur to remain financially viable. 29% of entrepreneurs end up failing in business due to running out of money, and avoiding penalties from CRA can be one of the ways that they can ensure they are not putting a financial strain on their business.

The first way that entrepreneurs can ensure that they are avoiding triggering a payroll audit, it is to file T4 and T fives on time. The T4 slips are place where entrepreneurs record the payroll deductions that they should have withheld from their employees checks, and then permitted to Canada revenue agency. The T fives slips, are for an entrepreneur to take note of all the dividends that shareholders have taken out of the corporation. These need to be filed by the last day of February. Edmonton bookkeeping says that the reason why it is very important to get these out on this deadline, is so that people can arrange to get their personal taxes done. By not filing us on time, business owners trigger penalties of monetary amount per employee, for every day that they are late.

The second way that entrepreneurs can avoid triggering up allotted in their business says Edmonton bookkeeping is to avoid paying source deductions late. Even though the deadline to submit payroll remittances is the fifteenth of every month following pay date, the recommendation is for entrepreneurs to not wait until the fifteenth of the month to remit source deductions to Canada revenue agency. In fact, the best practices for entrepreneurs to submit remittances to CRA at the same time as running payroll, that way not only do they not have to make the source the calculation twice, but they also do not have to worry about remembering to do it later, or doing it late.

The third way that entrepreneurs can avoid triggering a payroll audit is by paying the correct amount of source deductions. Edmonton bookkeeping says that this means that entrepreneurs need to know all of the taxes that need to be withheld including income taxes, CPP and EI. They need to ensure that if they are paying themselves a salary, that they also withhold the correct amounts from their own checks, and that as a business owner, they need to pay CPP and EI on behalf of the business.

This may be confusing for entrepreneurs to keep track of, but the earlier they learn this information, the easier it will be to ensure that they are avoiding triggering audits as well as incurring penalties in their business.

Edmonton Bookkeeping | Effective Strategies On Avoiding Payroll Audits

Not only are payroll audits time-consuming says Edmonton bookkeeping. But payroll audits can be very disruptive to a business, and end up with an entrepreneur incurring even more penalties because Canada revenue agency is scrutinizing their business. Therefore, so important that entrepreneurs understand what they need to do in their business to avoid triggering these payroll audits. However, if they have made mistakes, they may find themselves in a payroll audit, then they should be prepared for what is going to happen.

The first thing that entrepreneurs should expect, is if they have not remitted the correct amount of source deductions, is they may get a letter from Canada revenue agency asking for the entrepreneur to explain why there is a discrepancy. Edmonton bookkeeping would recommend that entrepreneurs should simply pay the amount that they owe at that time. However, if the right can a revenue agency back explaining why, and the explanation does not satisfy them, this will trigger a payroll audit. In order for business owners to avoid this, they should simply pay the amount that they have owing if they receive a letter from Canada revenue agency.

If a business owner is going through a payroll audit, they should expect an auditor from Canada revenue agency to contact them in order to ask for pay stubs, bank statements and reports that are going to show them what source deductions they should have paid. These reports are called PD seven eighty reports. What they are looking for says Edmonton bookkeeping, is to figure out where the source deductions went. Did entrepreneur spend it in their business, to pay a bill, or to pay themselves.

Business owners should keep in mind that Canada revenue agency takes not paying source deductions extremely seriously. In fact, some of the highest penalties that they will hand down to business owners come from not paying source deductions properly says Edmonton bookkeeping. The reason why, is because they view source deductions as trust funds. The money does not belong to the business owner because they collected it from the staff on behalf of the government, therefore there is no reason for an entrepreneur to keep it.

Canada revenue agency also views it as money that a business owner should have, because that is money that they would have otherwise given their staff. Therefore, the penalties are quite severe, and they are quick to trigger payroll audits if an entrepreneur has not paid source sections correctly.

Therefore, entrepreneurs should ensure that not only are they paying source deductions regularly, they are entering the calculation often, and finally that they are looking at the T4 prior to filing, and sending any amount left owing prior to filing their T4 slips in February, so that entrepreneurs can ensure that they will never have to go through payroll audit, or incur this to the penalties. By learning this early on in their business, ideally before they start paying themselves salary or dividends, and definitely before they start hiring staff can help entrepreneurs ensure that this scenario never happens to them.