Learning how to properly pay payroll taxes is not difficult says Edmonton bookkeeping, but if it is not done correctly, entrepreneurs can end up being hit with penalties that could be very difficult to make payments on. Therefore, it is extremely important that entrepreneurs as soon as they start running payroll in their business learn how to withhold the correct amount from their employee’s checks, and when they need to remit it to CRA by. By understanding these two things, an entrepreneur can avoid any payroll problems with Canada revenue agency.
One of the first things that entrepreneurs should know when they are starting to run payroll their business is what taxes they have to withhold from their employees, and what taxes they have to submit on behalf of their business. Edmonton bookkeeping says there are five components in all, and an entrepreneur needs to be aware of each of them, and the amount they have to withhold in order to ensure that they are remitting the correct amount to Canada revenue agency. The five component parts are: the employee portion of CPP as well as the employer portion of CPP, the employee portion of EI, and the employer portion of EI which is one point 4% higher than the employeeís position. In addition to those four components, the entrepreneur also needs to collect income tax from their employee’s checks. Edmonton bookkeeping says that when business owners are aware of how much to collect, they can ensure that there doing it accurately consistently.
Once an entrepreneur knows how much payroll tax to collect, the next important step according to Edmonton bookkeeping is understanding when it needs to be remitted by. While the fifteenth of the month is the deadline for any payroll run in the previous month, it is highly recommended for entrepreneurs to not wait until the fifteenth in order to remit payments. If there is an Internet or electronic issue, for even if there were computer problems on Canada revenue agencyís end, that could result in the payment being made late, and an entrepreneur being hit with a penalty.
The best practices according to Edmonton bookkeeping is for an entrepreneur to actually remit payroll taxes at the same time that they run actual payroll. Not only does this save an entrepreneur time, because there already calculating the source deductions, but it can also ensure that an entrepreneur will never pay late, or forgettable paying at all. By getting into the habit of doing this, entrepreneurs can ensure that there paying the correct amount on time.
It is not difficult for entrepreneurs to learn how to collect and remit source deductions accurately says Edmonton bookkeeping. However, it so important that business owners should come up with this plan ahead of time, and stick to i press long as they owe their business. By doing this, an entrepreneur will never have a problem with payroll and can focus on the more important priorities of the business which is growing and becoming successful.
Edmonton Bookkeeping | Properly Paying Payroll Taxes
Even though it can be simple for entrepreneurs to ensure that they are remitting the correct amount source deductions says Edmonton bookkeeping, they need to ensure that they have a plan in place that they follow that plan, because it can be very easy to miss this step when an entrepreneur has not already thought about it.
It is very important that a business owner finds out the consequences of not paying their source deductions on time. Edmonton bookkeeping says that the potential penalty for not paying their source deductions on time is percent interest per day. This is higher than credit card interest and acts as a deterrent for entrepreneurs to avoid. If they pay their deductions on time, this should be a worry for them.
In addition to ensuring an entrepreneur is paying their source deductions prior to the fifteenth, entrepreneurs should ensure that they are paying the correct amount as well. Edmonton bookkeeping says that if a business owner discovers that they had been remitting the incorrect amount, if they find this out before they file their T fours, they can send the remaining amount that they owe by January 15. Our has the complete amount paid by the time they file their T fours, Canada revenue agency will be satisfied that they have paid everything that they owe. However, if the CRA discovers that the amount that they should have remitted does not match what they actually have, they will send a letter asking for the entrepreneur to explain it, and if they cannot than a payroll audit be triggered. A payroll audit can be time-consuming, expensive and stressful. Entrepreneurs should avoid this with careful planning.
If an entrepreneur does end up owing Canada revenue agency, and they have triggered an audit, a business owner also needs to be aware that Canada’s revenue agency is quite aggressive in collecting the money that they are older. The reason why says Edmonton bookkeeping, is because Canada revenue agency considers the money that an entrepreneur needs to remit as trust fund money, and not paying it accurately or on time as a mismanagement of those funds. Therefore, they will be quite aggressive in collecting the money that entrepreneurs owe.
Not only are they very aggressive in collecting remittances, but directors of the corporation are actually personally liable for payroll tax. Which means, and revenue agency can be so aggressive that they will personally come after the directors of the Corporation to pay what is owed. If they cannot, CRA can go after the assets of the directors. Therefore, Edmonton bookkeeping recommends that business owners only have one spouse as the director in business to limit what CRA will be able to collect from the business owner if they are unable to pay.
By being aware of will happen if they do not remit the correct amount of source deductions can help doors create and stick to a plan. Not only does creating a plan ensure that an entrepreneur can avoid running into payroll problems with Canada revenue agency, but it also can free up their time and attention to focus on more important activities in their business like accomplishing all of the strategic priorities they need to in their business to grow and become successful.