Very important for entrepreneurs to learn how to calculate and remit payroll taxes correctly says Edmonton bookkeeping. It is so important that entrepreneurs avoid this penalty associated with doing it incorrectly, that they should create a plan prior to paying themselves a salary in their business, or prior to hiring staff that they are good put on the payroll. Whichever comes first, an entrepreneur needs to ensure that they have a place to do this correctly so that they will not chance being hit with massive penalties. A famous quote by zigzag where says, when you stop planning and preparing, you stop winning. Having a plan can ensure that an entrepreneur is calculating and paying source deductions correctly consistently, but also so that they can handoff the tasks to another director of the corporation or an employee that they hire set an entrepreneur can focus on growing their business.
One of the first things that an entrepreneur should do prior to hiring their first employee is saving up a financial cushion to ensure that they can still pay staff as well as source deductions if they run into financial difficulty. An entrepreneur will generally know that they have grown large enough to hire their first employee when they are able to save a month of that employee’s wages and save it in their bank account. This way, even if not nor runs into financial difficulties temporarily, not only can they ensure they are paying their staff, they are also paying source deductions as well. The last thing that an entrepreneur who is encountering some temporary financial difficulties need is to get hit with a penalty for not to remitting source deductions on time.
The next thing that a business owner should learn, is what all source deductions they need to withhold from their employees’ checks, and submit themselves. Edmonton bookkeeping says there are actually five components that an entrepreneur needs to be aware of, and know how much to withhold from the checks. There is the income tax, CPP and EI that they must withhold from their employee’s checks, there is also an employer portion of CPP and EI as well. Important to note that the employerís portion of EI is going to be one point 4% higher than the employeeís portion. By being aware of the correct amounts to withhold and submit to CRA can help not nor ensure that they are doing it consistently.
When an entrepreneur knows how much and payroll remittances they need to submit to CRA, the next thing that they should be aware of is to submit it prior to the fifteenth of the following month that payroll was running. That means, whichever month they calculated payroll and, the remittances are due to be paid to Canada revenue agency by the fifteenth of the following month. By knowing this deadline, entrepreneurs can make a plan ensure that they are submitting payment to CRA well in advance of that deadline so that they never be hit with a late penalty.
By learning how to remit source deductions properly, and in the right amount, business owners can avoid being hit with additional penalties that may be very difficult for them to pay according to Edmonton Bookkeeping. This can help business owners create a plan in their business, and know what they must do when they run payroll to avoid problems, but so that they can focus on the most important strategic priorities of their business.
Edmonton Bookkeeping | How To Avoid Remitting Payroll Late
Creating a plan for entrepreneurs to follow when running payroll can help ensure that they are calculating the correct amount of source deductions, and paying them on time says Edmonton bookkeeping. Not only are the penalties for paying late very high, but it also and triggering an audit that may be time-consuming and expensive for not in order to go through. These are completely avoidable, by knowing the rules and creating a plan to follow them.
In order to ensure an entrepreneur is not skiing missing the deadline for submitting remittances to Canada revenue agency, Edmonton bookkeeping recommends that entrepreneurs actually submit payment to Canada revenue agency and the same time that they are calculating payroll for their staff. They are already running the numbers on what source deductions that must be withheld from their staffís paychecks but being able to take that amount and pay Canada revenue agency the same time. This not only saves an entrepreneur time but also ensures that nor will never miss that deadline. Since the penalty for being even a single day late is 20% per day, this is a good practice to get into.
However, entrepreneurs need to be sure that not only are they avoiding paying late, but they also need to avoid paying the wrong amount as well. Canada revenue agency will be able to see how much source deductions an entrepreneur should have submitted by looking at their T4. If there is a discrepancy, the Canada revenue agency will ask the business owner to explain why. If they are unable to explain this, or if the explanation is not satisfactory, this will trigger a payroll audit.
If an entrepreneur suspects that they have underpaid, or even if they do not suspect, Edmonton bookkeeping says that entrepreneurs can look at their T4 before its submitted, in order to do the calculation themselves. If they discover that they have underpaid throughout the year, they can avoid triggering an audit by paying Canada revenue agency the rest of the source deductions that they owe and one lump-sum payment prior to filing their T4 slips. Avoiding this is a good practice for all entrepreneurs to get into, to ensure that they are current with what they should have paid Canada revenue agency.
By learning how to remit the correct amount, and how to do it on time can help a business owner create a plan for how to run payroll in their business. This plan can help business owners hand off the task to directors of the corporation, or other employees so that they can free up their own time to work on the strategic priorities they need to accomplish in their business to become successful and grow.