Not only is it important for an entrepreneur to understand what they need to do to avoid when calculating source deductions says Edmonton bookkeeping. But they also need to know what to do to avoid mistakes when remitting it to the Canada revenue agency. By finding out what they need to do prior to ever needing to run payroll can help not create a document like a checklist that is going to help ensure that they can follow all the steps accurately every single time to avoid making errors in calculating or remitting source that actions. That way, when an entrepreneur hires employees in their business, thinking of the same checklist to one of their staff members, to follow all the steps and calculate and remit source deductions accurately as well. This is important to do so an entrepreneur can focus their time and attention on all of the strategic priorities they need to accomplish in their business to grow.
One of the first things that entrepreneurs need to do, is understanding what source deductions they actually need to withhold from employees, and submit to Canada revenue agency. Not in our can contact their Edmonton bookkeeping company to find out what they are if they are unsure at any time. There are five components that they need to keep in mind: income tax, CPP, EI that are all withheld from their employee’s paychecks. If an entrepreneur pays themselves a salary, they also need to ensure that they are withholding CPP and EI from their own paycheck. In addition to that, a business owner also needs to understand that their business also owes a contribution of CPP and EI as well. The next thing that they need to keep in mind, is that the employer portion of EI is one point 4% higher than what the employees are expected to pay.
Once an entrepreneur has figured out how much source deductions to withhold and remit to Canada revenue agency, Edmonton bookkeeping says the next thing that they need to do is to figure when the best time to remit source deductions to CRA is. Their recommendation is for entrepreneurs to do this at the same time that they run payroll, not only because they are already doing the calculations and issuing payments, so be very easy, but this way and entrepreneur will never risk paying late, if they are paying it at the same time.
By figuring out the best practices by speaking to Edmonton bookkeeping, and creating a great checklist can help entrepreneurs ensure that they are withholding the correct source deductions, and remitting them in a timely manner. By doing this, entrepreneurs are avoiding 20% interest penalty that they could face for paying late and triggering a payroll audit. These things could cause an entrepreneur to experience financial hardship that might force them to close their business down. Therefore, it is very important that entrepreneurs create this plan on how they are going to collect and remit source deductions so that they can focus on the most important things in their business, which is growing and becoming successful.
Edmonton bookkeeping | How Else Can We Help?
The reason why is important fraud in order to create a plan ahead of time says Edmonton bookkeeping, is so that they know what they have to do as soon as they start running payroll to avoid payroll tax risks. This means they have to know how much to withhold, as well as remit and when. Creating this checklist can help entrepreneurs not only do this flawlessly every time, but hand off the activity to other directors of the corporation, or staff members so that they can accomplish the task correctly, and help an entrepreneur avoid penalties, they focus on all the strategic priorities of the business Which is going twelve to continue to scale up and grow their business.
Edmonton bookkeeping recommends that entrepreneurs submit remittances at the same time that they run payroll however the actual deadline is the fifteenth of every month, in the month following when payroll was run. That means if not nor is payroll in March, they need to remit source deductions by April 15. However, Edmonton bookkeeping recommends that entrepreneurs never wait till this deadline. If they are not doing it at the same time as running payroll, they could forget to do it, or they could plan on doing it on the fifteenth, but there might be a computer problem, the Internet might be down that day, or a business owner might run to problems that would actually keep them from going into work that they and if that is the case, then they will be hit with a penalty for being late.
If they are hit with a penalty, business owners should expect to get a 20% interest charge calculated every single day. This is much higher than even high-interest credit card rates that have a 19% interest over an entire year. This means if not nor owes Canada revenue agency five thousand dollars, in a single day that can turn into six thousand dollars. With how high the penalty is, Edmonton bookkeeping says the goal is for it to be a deterrent to paying late. Therefore, entrepreneurs need to be aware of this penalty, and create a document that can help them avoid it.
Also important to note that Canada revenue agency is quite aggressive in collecting remittances that are owed to them, and that director are personally liable for any amount outstanding. Therefore, business owner’s assets might be in danger if they make a mistake running payroll, and have a huge penalty that makes it difficult for them to pay.
By being aware of all of the risks associated with calculating payroll remittances incorrectly, can help a business owner create a plan, and then strictly follow the plan so that they are never remitting source deductions incorrectly. This document can also give an entrepreneur peace of mind that will allow them to focus on growing their business so that they can become successful.