It is very important that entrepreneurs learn very early on in their business what T4 and T5 slips are says Edmonton bookkeeping. Many entrepreneurs never have had a business ownership experience before starting their own business, and often need to learn very quickly the things that they need to do to be successful. As soon as they start paying staff, or paying themselves salary, it is very important that entrepreneurs learn what T4 and T5 slips are. By learning what they are, filing deadline, business owners can avoid putting their business at risk financially by triggering penalties. Even worse, entrepreneurs can end up triggering a payroll audit, where Canada revenue agency will end up scrutinizing their business.
The first thing that entrepreneurs need to know, is what information a T4 and T5 slip is recording, and the difference between the two. A T5 slip is showing all of the dividends that each shareholder has taken out of the corporation. Edmonton bookkeeping says that since dividends are a way that earnings of the corporation are dispersed, only shareholders are entitled to receive it T5 slip. In addition to that, only after a corporation has generated earnings in their business, and then disperse those earnings as dividends are T5 slips need it.
T4 slips on the other hand are needed any time an entrepreneur has paid anyone in the organization a salary. Whether it is themselves, or their staff. T4 slips show all of the payroll deductions that should have been withheld. . This means that income taxes, CPP and EI from every salaried employee, including the business owner must be withheld. However, Edmonton bookkeeping says that entrepreneurs need to understand that as an employer, a business owner needs to also contribute CPP and EI on behalf of the business as well as.
After an entrepreneur understands what the T4 and T5 slips are, the next thing that they need to understand is the filing deadline for these slips. They need to be filed at the same time, even though the account for two very different things. The last day of February is the filing deadline. If entrepreneurs file late, they will trigger penalties that penalize an entrepreneur a certain amount of money per employee per day that they are late. This can add up very quickly, especially if an entrepreneur has many employees or is very late in filing.
The reason why it is very important for entrepreneurs to file these on time, is because Canada revenue agency needs this information in order to calculate all of the source deductions that an entrepreneur should have paid. In addition, the T4 slips are what employees need to have in order to do their taxes. It is extremely important that business owners are ensuring that their staff can get their taxes done in a timely fashion.
It can be very easy to learn the differences between a T4 and a T5 slip, what they are, and when they need to be filed says Edmonton bookkeeping. However, as easy as this is to learn, more importantly once an entrepreneur learns this, they can avoid triggering a payroll audit as well as triggering penalties that can financially devastate the business.
Edmonton Bookkeeping | Understanding What T4 And T5 Slips Are
It is very important that entrepreneurs understand that a T4 slip is going to show all of the source deductions that an entrepreneur should have paid Canada revenue agency says Edmonton bookkeeping. The reason why, is because if an entrepreneur has accidentally or inadvertently remitted the incorrect amount, this will be noted on the T4 slip. If they do not catch this prior to filing it, they could end up triggering a payroll audit or penalties in their business.
It is very important that entrepreneurs are ensuring that they are paying the correct amount of source deductions says Edmonton bookkeeping. Canada revenue agency sees source deductions as government money, that is being held in trust by business owners. If they have not remitted the correct amount, Canada revenue agency sees that as a very serious a fence which is why it carries some of the steepest penalties that Canada revenue agency issues. If an entrepreneur has withheld the correct amount from their staff, but not remitted properly, the government will view that as using government money to fund a private corporation.
Therefore, it is extremely important that entrepreneurs are calculating source deductions accurately. However, even if they have been very diligent in calculating this, it is still a good practice to review their T4 slip prior to filing it. Edmonton bookkeeping says this gives entrepreneurs an opportunity to review the amounts that they should have paid against how much they did. If they have accidentally underpaid, they can simply send payment off to Canada revenue agency prior to filing that slip, to avoid triggering an audit or being hit with a penalty.
If entrepreneurs are concerned about calculating the correct amount, all they need to do is use their accounting or payroll software such as QuickBooks, QuickBooks online, Sage or zero in order to figure out the source that actions they owe says Edmonton bookkeeping. Or, they can simply enter their payroll amount into program on the Canada revenue agency website, and have it calculated.
In addition to avoiding paying the wrong amount, it is very important that entrepreneurs also are avoiding paying late. Edmonton bookkeeping says that the deadline to submit payroll remittances to CRA is the fifteenth of the month, following the pay dates. This means, that if entrepreneurs have run payroll in March, April 15 is the deadline. As long as they are paying their deductions prior to this date, they can avoid triggering penalties or audits. However, best practices would suggest that entrepreneurs do not wait for this date in order to submit their payroll remittances, that they actually get into the habit of remitting source deductions at the same time they run payroll. Not only does this save time, because are already calculating source deductions, but this also ensures that they will never be late with their source deductions remittances ever. Doing this can help them avoid