The reason why is very important for entrepreneurs to ensure that they are paying their source deductions accurately and on time says Edmonton bookkeeping, is because Canada revenue agency sees source deductions as trust fund dollars, and if an entrepreneur does not pay them correctly, they see that as an abuse of money that is not there. Therefore, it is very important for entrepreneurs to learn how to calculate these amounts and submit them to CRA correctly and consistently. By coming up with a plan, an entrepreneur can ensure that there doing it accurately every time, so that they can focus their time and energy on growing their business.
As soon as an entrepreneur starts paying themselves a salary, or once they have hired their first employees that are going to be on their payroll, an entrepreneur needs to understand how much source deductions to withhold from their paychecks. Edmonton bookkeeping says that an entrepreneur has to keep track of five different source deductions, and their amounts. By learning what these are ahead of time can ensure that entrepreneurs calculating them correctly. The five components are: income tax, employee portions of CPP and EI, as well as the employer portion of CPP and EI. Many entrepreneurs are aware of the employee portion, but do not realize that they as an employer must remit payroll taxes on behalf of the business, which is in addition to the CPP and EI that they themselves are withholding from their own paycheck and remitting to Canada revenue agency. Not only do they have an employer portion, but the EI employer portion is actually higher than the employees portion by one point 4%. Being aware of this is important to ensure its being done correctly.
If an entrepreneur is remitting source deductions on time every single month, but are paying the wrong amounts, they are not going to get notified by Canada revenue agency until they file their T4 slips. Edmonton bookkeeping says that after not nor has filed their T4, CRA will be able to see on the T4 slip how much source deductions an entrepreneur should have remitted, and they will compare it to how much an entrepreneur has actually remitted. If the two amounts do not match, CRA will send a letter asking a business owner to explain the difference and if they cannot explain it, or CRA rejects the explanation, they will issue a payroll audit.
In order for an entrepreneur to avoid triggering an audit this way, Edmonton bookkeeping says that as they are preparing their T4 slips, they should take note of how much they should have submitted to Canada revenue agency. If they are short by any amount, the recommendation is for them to submitted to CRA prior to completing their T4 filing. By doing this, entrepreneurs can avoid triggering an audit.
Once an entrepreneur learns all of the rules on how to calculate and remit source deductions properly, that can help ensure that they create a plan that they or their staff can follow on a regular basis to ensure this is being done correctly. That will allow an entrepreneur to focus their time and energy on the strategic priorities of their business, and accomplishing all the tasks that are going to allow them to grow their business.
Edmonton Bookkeeping | Paying Source Deductions Incorrectly Can Trigger An Audit
It is very important for business owners to come up with a plan and a checklist when it comes to learning how to do payroll properly says Edmonton bookkeeping. The reason why is because if an entrepreneur makes any mistakes whether it is not remitting the correct amount, or remitting it too late can end up triggering penalties and audits that may cause financial hardship to an entrepreneur business. Therefore, learning what they must do and then creating a plan with a checklist can help ensure that an entrepreneur is following the system consistently, even if they handed off to an employee to take care of.
Business owners need to understand that there is that monthly deadline to have remitted source deductions to the Canada revenue agency. The payroll deadline is the fifteenth of the month, and the month following when payroll was run. However, business owners should not wait till the deadline in order to remit payment. If anything goes wrong either with the computer or with the Internet a could cause an entrepreneur to have their remittance show up late. The potential penalty for even being one day late is 20%. As a huge penalty, and can be avoided if entrepreneurs make a plan to remit payment well before the fifteenth of the month.
Edmonton bookkeeping has a recommendation for entrepreneurs to submit payment to the Canada revenue agency at the same time that they are running payroll. The reason why, is because not only is it not been are already thinking about payroll remittances and calculating the correct source deductions, but it is very easy to simply make a payment for the same amount sent it off to Canada revenue agency while there already working on payroll. I submitting the source deductions at the same time that they run payroll, an entrepreneur will never take the risk of missing the deadline.
The also very important for entrepreneurs to know that directors of the company are personally liable for payroll tax and any penalties associated with paying it late. Because the directors are personally liable, businesses should take care to ensure that they are calculating the correct amount and remitting it on time consistently.
As long as entrepreneurs are aware of the rules, they can make a plan to ensure that they are remitting the correct amount of source deductions and remitting it on time. Having a plan in place can help ensure that an entrepreneur is consistent, and can spend their time and energy on activities that they need to grow their business, knowing that this is looked after. The larger a business grows, the more important this is going to be, so getting into the habit and creating a plan early will be extremely important for businesses to have place.