Business owners do not have to worry about payroll remittances until they either start paying themselves a salary, or they have employees says Edmonton bookkeeping. However, once an entrepreneur has one of those two things in their business, it is important that they learn how to appropriately calculate payroll remittances and pay them as well. Canada revenue agency takes a very hard line when it comes to remitting payroll taxes correctly. The reason why, is because they view those funds as a trust fund. A business owner is entrusted with collecting the correct amount and delivering it to the government. If they do not do this properly, it is considered mismanagement of trust funds, and CRA will be very relentless in their penalties and pursuit of that money.
If an entrepreneur is running into troubles financially, they need to ensure that out of all of the things that they stop paying, payroll taxes are not one of them. The reason why says Edmonton bookkeeping is if an entrepreneur is already running into financial problems, being hit with penalties for filing late or missing a filing, or filing to little can further cripple business financially and could potentially cause them to go out of business.
For the first things that an entrepreneur can do when they start running payroll in their business, is create a plan on what they are going to do to ensure that they remitting payments on time, and in the correct amount. Edmonton bookkeeping recommends that entrepreneurs create savings for source deductions. By keeping one month of source deductions as a buffer in their bank account can help ensure that even if an entrepreneur falls on difficulties financially, they will be able to meet source deductions, and avoid getting hit with penalties from Canada revenue agency.
In addition to submitting the payment on time, it is very important for a business owner to ensure that there submitting the correct amounts as well. Ten bookkeeping says that there are actually five different components of CRA remittances. If an entrepreneur is not aware of all of them, they could potentially risk underpaying which would cause them to be hit with penalties. These five components are the employer and employee portion of CPP, the employer and employee portion of EI, as well as the income tax. By being aware of all five of these components, and how much they are can help ensure that an entrepreneur is withholding the correct amount from their staff and that they are paying the correct amount as the employer contribution.
By being aware of this and having a buffer in place can help ensure that entrepreneurs will be able to pay the correct amount of source deductions on time on a regular basis. When they do this, entrepreneurs will be able to focus their attention on or important activities in their business like doing the sales and marketing of their business and achieving all the strategic priorities of their corporation.
Edmonton Bookkeeping | Payroll Remittances In A Business
Business owners should be making sure when they start running payroll for the first time in their business according to Edmonton bookkeeping that they are only aware of how much they need to remit, that they are doing so on time. By being the correct amount and on time can help ensure that entrepreneurs will never run into payroll problems from Canada revenue agency.
One of the first things that business owners need to know, is when their payroll remittances are due to be submitted to the Canada revenue agency. Edmonton bookkeeping says that the deadline for most businesses is the fifteenth of the month in the month following when payroll was. That means, if an entrepreneur finished payroll in March, the remittances would be due by April 15.
Even though the deadline is the fifteenth, Edmonton bookkeeping recommends that entrepreneurs never wait until the deadline in order to submit their remittances to Canada revenue agency. Far too much could go wrong especially if they are submitting it electronically. If anything goes wrong, it would cause an entrepreneur to file late, and be potentially hit with penalties. Therefore, the best practices that are recommended to all entrepreneurs is to simply submit their payroll taxes to the Canada revenue agency at the exact same time that they are running payroll. That way, they’re never going to have to try to remember to do it, or missed the deadline.
Business owners should be aware that even if they aim to never be late with their remittances, what the penalty is. It is extremely high, and Canada revenue agency uses it as a deterrent. The potential penalty for being even a single day late on the remittances is 20% per day, which is higher than credit card interest. Because how severe this penalty is, this is owners can ensure that they stick to their plan of remitting source deductions at the same time they submit payroll.
Business owners should also be aware that the Canada revenue agency is quite aggressive in collecting the amounts owed to them on source deductions. The reason there so aggressive, is because they consider the money that should be remitted as trust funds, and not money that the entrepreneur can use as they wish. Therefore, when they are not permitted properly, they see it is an abuse of trust funds. They will even go after the directors of the company and hold them personally liable for payroll tax. This means, the directors of the company whether they are responsible for submitting source deductions are not could end up losing their assets in order to pay for the amount that owed.
It is very important that entrepreneurs are aware of all of the penalties associated with running payroll remittances, so that they can avoid these issues. Edmonton bookkeeping says that by creating a plan and sticking with that plan can help ensure entrepreneurs do not have to spend any time worrying about source deductions, and they can put their time and energy into more important things, like growing their business.