It is very important that entrepreneurs understand how important it is to file their T4 and T fives in their business says Edmonton bookkeeping. If business owners do not know this, they could end up not only triggering a payroll audit, which can be time consuming and a disruption to their business to go through. But also, it could end up triggering penalties for entrepreneurs to pay. This can be financially difficult for entrepreneurs, especially since 29% of entrepreneurs that fail say the reason why they failed is because they ran out of money in their business.
The first thing that entrepreneurs need to understand, is what is being recorded on the T4 and T5 slips says Edmonton bookkeeping. T fives are for reporting all the dividends that have been disbursed from the corporation to shareholders. If shareholders have not taking dividends, this will not result in T fives being created Says Edmonton bookkeeping.
T fours on the other hand are accounting for something completely different. This is where all of the payroll deductions for all of the employees that are running a salary get noted. All of the taxes including income tax, CPP and EI. If a business owner is also taking a salary, they should understand the also own payroll deductions from the amount that they take as well. Often, since entrepreneurs are not finding out if the money that they have taken out of their business is salary or dividends until the end of the year, they need to ensure that at the end of the year, if they have taken salary, that they end up paying Canada revenue agency all the payroll deductions that they owe for themselves.
Once an entrepreneur understands what a T4 and T5 is, Edmonton bookkeeping says the next thing they need to know is when those T4 and T fives need to be filed. They need to be filed the same time, which is the last day in February. If they do not file on this day, they should expect to trigger penalties. Penalties associated with not filing this on time is a certain amount of money per employee, or day that they are late. The reason why this is so important to file on time, so that employees have the tools that they need in order to do their personal taxes, which are due at the end of April. By being late, it seemed employees at a disadvantage, and unable to complete their taxes on time.
In addition to incurring a penalty for not filing their T4 and T5 on time, Edmonton bookkeeping says that this can end up with Canada revenue agency assessing them a payroll audit, which will end up with an auditor scrutinizing their business, not only causing an inconvenience, but potentially costing even more in penalties as the auditor goes through their business.
Learning how to avoid triggering a payroll audit is extremely beneficial to entrepreneurs, especially as the add staff, and increase the amount of payroll deductions that they have to remit. By learning this early on in their business, entrepreneurs can be confident that the matter how many staff the higher, that they will never have to go through a payroll audit in their business.
Edmonton Bookkeeping | How To File T4 And T Fives Correctly
Not only does it trigger audit if entrepreneurs are not filing their T4 or T fives properly says Edmonton bookkeeping, but there is other ways that entrepreneurs can be hit with a payroll audit. If the pay their source deductions late, or if they have not paid enough by the end of the year. Therefore, entrepreneurs should learn all of things that they should take into consideration to avoid these problems in their business, so that they can avoid a payroll audit.
An entrepreneur who misses the source deductions remittance deadline for Canada revenue agency, may find themselves not only being hit with penalties, but also triggering a payroll audit. Therefore, Edmonton bookkeeping recommends that entrepreneurs understand that the deadline for entrepreneurs to submit payroll remittances to Canada revenue agency is the fifteenth of the month, in the month following the pay date. This means that if an entrepreneur rent payroll in January, that all of the payroll remittances would be due to submit CRA by February 15.
Business owners should avoid submitting payroll remittances at the last day, and instead develop good habits like submitting payroll remittances at the same time as they run their people. What this can do, is increase the accuracy of the source deductions, by ensuring that an entrepreneur is remitting the same amount that they have calculated. In addition to that, by making the payment on the same day as running payroll, will never risk remitting it late.
It is also very important that entrepreneurs are paying the correct amount. Despite what many entrepreneurs may believe, if they have underpaid Canada revenue agency on a monthly basis, they are not going to get a letter from CRA. However, once an entrepreneur files their T fours, CRA will be able to see if an entrepreneur has paid enough source inductions. If not, that is when they should expect a letter from CRA asking to explain the discrepancy.
One great tip that entrepreneurs can use to ensure that they have paid enough source deductions, is prior to filing their T4 slips, after the calculate the amount, they should verify that they have paid enough source deductions. If they have not says Edmonton bookkeeping, they should make that payment to Canada revenue agency prior to completing their T4 filing. That way, even if they have underpaid through the year, they are not putting their business at risk of a payroll audit because they will have paid the correct amount by the time they file their T4 slip.
By learning all of the things that they need to do in order to avoid being hit with payroll audits, or assessed penalties, entrepreneurs can be confident that as they add new employees, and complete their year end filing, that they will not have to go through an audit, or be hit with penalties that can be difficult to pay.