It is extremely important for entrepreneurs to remit source deductions accurately says Edmonton bookkeeping. The reason why, is because Canada revenue agency hands out some of the stiffest penalties ever on incorrectly paid source deductions. The reason why, is because they consider source deductions as government trust funds. If an entrepreneur has withheld that amount on behalf of the government from their employees checks, and then failed to send that exact amount to Canada revenue agency, they view it very seriously. If an entrepreneur has use the money to either pay themselves, or to fund operations in the business, they view that as stealing government money for private endeavours. Therefore, it is very important that entrepreneurs learn everything that they need to about source deductions and T4 and T5 slips to avoid making mistakes.
The first thing that entrepreneurs need to understand, is that they need to file their T4 and T5 slips on time every year. The amounts that are being recorded on their T4 slips are payroll deductions. This is all of the income tax, CPP and EI that they have withheld from their staffs paychecks says Edmonton bookkeeping. However, entrepreneurs also need to be aware that if they are taking a salary themselves, they also need to withhold those taxes from their own paycheck. And finally, in addition to that entrepreneurs also have to pay CPP as well as EI as an employer as well. All of these source deductions are going to be recorded on a T4 slip.
A T5 slip on the other hand says Edmonton bookkeeping is the place where all of the dividends that all shareholders have taken out of the business are noted. This is only for shareholders, and only if they have taken dividends. It is also very important to note that entrepreneurs do not pay any taxes on their dividends. That means no source deductions or payroll remittances are taken from dividends at all.
Once an entrepreneur understands what a T4 and T5 slip is, they have to understand that the filing deadline for the slips every single year is the last day of February. Therefore, they need to ensure that they have these slips filed on time in order to avoid triggering a penalty. The penalties associated with filing T4 and T5 slips late is a dollar amount per employee, per day. The more employees entrepreneur has, and the more days that they are late and Jep adding to the penalty.
The reason is very important to ensure that they file their T4 and T5 slips on time, is because this is how Canada revenue agency calculates the source deductions that an entrepreneur owes them. If a business owner has underpaid their source deductions, that could end up triggering penalties and payroll audits. Therefore, it is very important that an entrepreneur keeps track of all of their source deductions, and then remits payment promptly says Edmonton bookkeeping.
Edmonton Bookkeeping | Learning The Difference Is Between T4 And T5 Slips
It can be very easy for entrepreneurs to know the things that they have to avoid in order to avoid getting a payroll audit, or triggering penalties says Edmonton bookkeeping. All they have to do is ensure that they are paying the correct amount of source deductions, and paying on time. By doing these two things consistently, entrepreneurs can simply avoid ever receiving a penalty for doing this incorrectly, and they know that they will always be able to avoid triggering a payroll audit.
Even though an entrepreneur may understand that they have to withhold income taxes, CPP and EI from their employees checks, as well as their own checks if they take a salary. Edmonton bookkeeping says that they may not know the exact amount. This leads to entrepreneurs underpaying. If the are submitting the incorrect amount, but are meeting the deadline to remit source deductions, they will not get notified by Canada revenue agency that they have underpaid until they file their T4 slips.
However, it can be easy to keep track of source deductions if entrepreneurs are aware of all of the tools they have at their disposal. If they are using a payroll or an accounting software such as QuickBooks, QuickBooks online, Sage or zero, entrepreneurs can use that software to figure out how much source deductions they owe. Or, they can simply enter all of their payroll amounts information into a program that Canada revenue agency has on their website, in order to find out how much source deductions they need to withhold from their employees checks, and then permit to Canada revenue agency.
They also need to understand when they need to remit payment by says Edmonton bookkeeping. While the deadline to submit payroll remittances is the fifteenth day of every month, in the month following pay date. Best practices says that entrepreneurs should not wait until this deadline in order to remit payment. If anything goes wrong, the risk Canada revenue agency not getting the payment on that same day, and triggering penalties. Edmonton bookkeeping says a much better plan of action is for entrepreneurs to simply’s submit their payroll remittances to Canada revenue agency at the same time that they run payroll. Since the remittances are to do until after payroll is run, sending them at the same time not only saves time, because an entrepreneur has already calculated the remittances. But also it ensures that by following this protocol, and entrepreneur will never be late in paying.
another best practice that entrepreneurs should follow according to Edmonton bookkeeping is to look at the source deductions that they should have remitted on their T fours prior to filing them. When an entrepreneur does this, they simply verify that they have paid the correct amount. If, for some reason they have underpaid, they can simply send Canada revenue agency the amount that they owe prior to filing their T4 slips, and avoid triggering penalties or payroll audits for themselves. This is extremely important, as long as entrepreneurs know what they need to do in their business, it can avoid getting source deductions penalties, or triggering payroll audits.