Business owners should understand the difference between T4 and T5 slips says Edmonton bookkeeping. This is in addition to understanding when to have them filed every year in order to avoid incurring penalties, or triggering payroll audits in their business. If entrepreneurs have not filed their T4 and T5 slips properly, they may find themselves being assessed a payroll audit that not only will have Canada revenue agency scrutinizing their business, but costing them time, and money in the process.
The first thing that entrepreneurs should keep in mind is even though they have similar names says Edmonton bookkeeping, a T4 and T5 slip are really recording very different information. T fives are for entrepreneurs to record all of the dividends that have been disbursed in the corporation that year. Therefore, any shareholders that have received disbursement of the earnings of the business will get a T5 slip. If the business has not turned a profit yet, or if the shareholders have not been disbursed funds, no T5 be made.
T fours on the other hand says Edmonton bookkeeping are where all of the payroll deductions are going to be recorded. For every salaried staff that an entrepreneur has, as well as themselves, if they take a salary in their business will need to have all of their payroll deductions accounted for here. This means not only income taxes, but CPP and EI. Edmonton bookkeeping says that entrepreneurs that take a salary also must have that withheld from their paychecks. Also, business owners need to take into account that their employer portion of CPP and EI must also be accounted for here as well.
Once an entrepreneur understands what a T4 and T5 slip is his Edmonton bookkeeping, the next thing they need to learn is when that needs to be filed. Since employees are going to require having the T4 slips in hand prior to getting their personal taxes done, it is important that entrepreneurs adhere to the deadlines. The deadline to have these T4 and T5 slips filed is the last day in February. Edmonton bookkeeping says that this is February 28, unless it is a leap year and then it is February 29.
If entrepreneurs end up not filing their T4 and T5 slips on time, not only will they potentially trigger a payroll audit from Canada revenue agency, but they will also incur penalties. The penalty associated with filing a T4 and T5 late is being assessed of monetary amount for every employee that an entrepreneur has. How much this amount is depends on how many employees a business owner has. They will get assessed that amount for every day that they have not filed. This can add up quite significantly, especially if an entrepreneur has several employees, or has filed extremely late.
Business owners can simply avoid incurring penalties, or triggering payroll audits if they ensure that they file their T4 and T fives on time. By working to ensure that they are meeting this requirement, not only can entrepreneurs ensure that their staff have the tools they need to do their personal taxes, but that they can avoid paying additional amounts that could cause their business to be negatively impacted by penalties.
Edmonton Bookkeeping | The Distinction Between T4 And T5 Slips
Even though business owners may know when the T4 and T5 filing deadline is says Edmonton bookkeeping, if they miss this deadline they could find themselves being assessed a payroll audit. Going through payroll audit can end up not only costing a business owner significant amount of time, as they comply with the Canada revenue agency auditor. But also it can end up disrobing their business, as well as costing them additional amounts of money in fines, particularly if the auditor finds more discrepancies as they look into the finances of the business.
One of the things that entrepreneurs should know, is that there is two main functions of a payroll audit says Edmonton bookkeeping. The auditor is going to be looking at the bank statements in order to find out where the source deductions went, and look at the entrepreneurs personal expenses to figure out if the not nor has taken the source deductions themselves.
This is extremely important for entrepreneurs to keep in mind, because Canada revenue agency issues their stiffest penalties for entrepreneurs that have mishandled source deductions amounts. The reason why says Edmonton bookkeeping, is because they view source that actions as government funnels that are being held in trust. If an entrepreneur does not submit the correct amount, or submit that late, they view it as a private corporation utilizing government funds to operate.
When an entrepreneur is assessed a payroll audit, they should expect Canada revenue agency auditor to contact them, and ask for all of the stems in their business for the past year, all of the bank statements for all of the bank accounts, and something called a PD seven a report. This is going to show the auditor but source that actions should have been paid. Not only is a payroll audit very time-consuming and disruptive to the business, but to get end up costing even more and penalties depending on what the auditor finds.
There are three things that entrepreneurs can do that can help ensure that they never have to go through payroll audits, or incur penalties says Edmonton bookkeeping. They can file their T4 and fives on time, they can pay their source deductions on time, and they can pay the correct amount. If any entrepreneurs are struggling with any of this, they can contact their Edmonton bookkeeping company in order to find out how they can help themselves understand how to avoid these issues in their business.
The sooner and entrepreneur can learn these in their business, the sooner they are going to be able to ensure that they can avoid a payroll audit and triggering penalties for themselves. By keeping an eye on this in their business from the beginning, and as the start paying themselves salary, dividends and taking on staff the better.