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There are three ways that entrepreneurs can trigger a payroll audit in their business says Edmonton bookkeeping. Not only is it important to know what these three things are, but what to do to avoid those circumstances as well. Not only can going through a payroll audit be time-consuming, but going through a payroll audit can also be very disruptive to the business. Also, if an entrepreneur is going through payroll audit, chances are very high that there also going to incur significant penalties as well. These penalties can put a financial strain on the business, or even cause businesses to fail due to running out of money. Therefore, it is extremely important that entrepreneurs understand not just all of the ways that payroll audits are triggered, but what they can actively do in their business to avoid them as well.

The first thing that entrepreneurs can do to avoid a payroll audit, is to ensure that they are submitting their T4 and T fives on time. Edmonton bookkeeping says that T4 and T fives need to be filed by the last day of February. Since T fours deal with payroll deductions, and are required to have before a person can complete their personal taxes, it is very important to ensure that they have them well in advance of the personal tax deadline of April 30. Also, Canada revenue agency needs to ensure that the T fours are filed on time, so that they can verify that businesses have paid the correct source deductions as well. Therefore, if entrepreneurs miss this filing deadline, not only will they trigger penalties, they will also trigger a payroll audit as well.

The second way that entrepreneurs can avoid payroll audits, is avoid paying source deductions late. Edmonton bookkeeping says that even though entrepreneurs have a deadline of the fifteenth of every month in the month following payroll to submit payroll remittances, they should not wait for the last day in order to pay them. In fact, best practices with be for entrepreneurs to remit source deductions to Canada revenue agency at the same time that they run payroll. That way they can do the source deductions calculation once, and then not have to remember to come back and get it done. Also, by submitting remittances at the same time as payroll, entrepreneurs can ensure they are never going to miss the deadline.

The third way that entrepreneurs can avoid triggering up will audit, is to pay the correct amount of source deductions says Edmonton bookkeeping. If an entrepreneur is calculating an incorrect amount, they will not be getting notification from Canada revenue agency on a monthly basis. Instead, if an entrepreneur has underpaid, by the end of the year when they submit their T4, Canada revenue agency will compare the source of actions that they should have paid against how much they actually did. If they have underpaid, and could trigger a payroll audit as well as a penalty. Therefore, entrepreneurs can simply verify that they have paid the correct amount of source deductions prior to filing their T fours says Edmonton bookkeeping. If they have discovered that they have underpaid, prior to submitting their T4 slips to the government, they should simply make a payment to cover the shortfall, and then file their T4 slips later. This way, they will never risk being audited because they have not paid enough. However, in order to do this, an entrepreneur will have to ensure that they are completing their T4 filing well before they February 29 deadline.

Edmonton Bookkeeping | Triggering Payroll Audits In Business

It is very important for entrepreneurs to avoid triggering a payroll audit in their business says Edmonton bookkeeping. The reason why, is because even though payroll audit is a disruption, the most important reason is because a payroll audit will come accompanied by steep penalties. It is the penalties that can really be detrimental to entrepreneurs. Since half of all Canadian businesses will fail by year five, and 29% of those failed entrepreneurs say that running out of money was the reason their business failed. Therefore, when entrepreneurs avoid incurring unnecessary penalties, they are giving their business and extra chance at surviving, because they are not incurring additional charges that may be difficult or impossible to pay.

The first thing that entrepreneurs should know, is if they have either paid their source deductions late, paid the incorrect amount, or filed their T fours late, all of these things can trigger a payroll audit says Edmonton bookkeeping. In some locations, an entrepreneur may simply be asked to pay a penalty. In other situations, Canada revenue agency may send a letter asking for an explanation. Edmonton bookkeeping would recommend if entrepreneurs get this letter, that they simply pay whatever’s owing instead of trying to explain why they did not pay the right amount. If Canada revenue agency is not satisfied with the explanation, it will trigger a payroll audit. Therefore, entrepreneurs that get this letter should consider it a warning from CRA, and consider themselves lucky that they did not trigger an audit.

The point of a payroll audit according to Edmonton bookkeeping is for the auditor to find out where the missing the source deductions went. Canada revenue agency views a mishandling of source deductions as one of the gravest of fences that an entrepreneur can make. This carries the highest penalties, because the view source deductions as money being held in trust for the government and when that money is not paid on time, or not paid in full, they view it as an abuse or theft of government money. Therefore, the auditors job is to find out where went and if an entrepreneur used it to pay for business expenses, or if they took it and paid themselves with it.

What an entrepreneur should expect, is for the auditor to request every single paystub in the last year, every single bank statement for every single bank account, as well as something called PD seven a report, which will show the auditor all of the source deductions that an entrepreneur should have paid.

Business owners who want to avoid going through this process, should ensure that they are paying their source deductions on time, in the correct amount, and then filing their T fours accurately says Edmonton bookkeeping. By doing this, entrepreneurs will not only save themselves the time-consuming process and hassle of an audit, but they will also avoid having to pay the extremely high penalties that could be very damaging to their business. By keeping this in mind, entrepreneurs will be able to grow their business and be successful.