It is very important that entrepreneurs understand not only the difference between T fours and T fives says Edmonton bookkeeping, but what is recorded on each one, and the filing deadline for each. If entrepreneurs want to avoid getting penalized from Canada revenue agency, they should become familiar with their T4 and T5 slips, what they are recording, how to ensure they are paying the correct amount, and paying on time.
The first thing that business owners need to understand, is that a T4 slip is where the record all of the source deductions for their staffs salary, as well as the business owners salary. This includes income tax, employer and employee CPP and EI. T fives on the other hand says Edmonton bookkeeping are for recording the dividends that shareholders only have taken out of the corporation. Two very different amounts are being recorded on these slips.
The next thing that entrepreneurs should be aware of, is when T fours and T fives need to be filed by. Even though they are keeping track of two very different things, they still have the same deadline. Business owners need to ensure that they have these filed by the last day of February. This means February 28 unless it is a leap year, and then that filing deadline is February 29.
It is not just important that entrepreneurs understand when T fours and T fives need to be filed by, they also need to ensure that they are submitting the payroll remittances, the income tax, CPP and EI on time every month as well. Edmonton bookkeeping says that most businesses have a filing deadline of the fifteenth of every month for source deductions remittances. This means that whenever payroll was run, the following months fifteenth day is when the source remittances are due.
Once an entrepreneur understands when to remit source deductions to Canada revenue agency, Edmonton bookkeeping says it is also very important that they understand how much they need to remit. Source deductions need to be withheld from their employees paychecks, as well as there is apportionment that an employer must pay as well. In order to calculate the correct amount of income tax, CPP and EI off of their employees checks, and then to figure out how much CPP and EI they also must pay as an employer, there are several easy ways to keep track. Edmonton bookkeeping says that Canada revenue agency has a program that entrepreneurs can use where they put in the payroll amounts into the program, and it will show the entrepreneur how much source deductions must be withheld from each of their employees checks. By using this, entrepreneurs should always know the correct amount to pay.
Business owners can ensure that they are paying source deductions correctly, by ensuring there paying the correct amount, and paying them on time. Once they do this, they just need to ensure that there filing their T fours and T fives by the last day of February, and they will have insured that the avoiding triggering any payroll audits from Canada revenue agency.
Edmonton Bookkeeping | What Are The Differences Between T Fours And T Fives
If entrepreneurs are not aware of the differences between T fours and T fives, Edmonton bookkeeping says this could cause problems. Business owners also need to know when they need to be filed, or if they end up paying source deductions late or in the incorrect amount could create problems for entrepreneurs. If an entrepreneur makes these mistakes, they could find themselves in the middle of a payroll audit that not only could cost them time, but could also end up with him having to pay steep penalties.
The two main functions of a payroll audit according to Edmonton bookkeeping is for the auditor to look at the entrepreneurs bank statements to see where the money went, and then look at the business owners personal expenses to figure out if they have spent the source deductions money. Canada revenue agency takes a extremely serious stance on entrepreneurs who do not pay source addictions adequately. The reason why, is because they see it as an abuse of trust funds. An entrepreneur should not use that money at all, because they have held it from their employees salary, in order to pay the government with it. If they do not pay the correct amounts, Canada revenue agency considers that misusing government money.
Many entrepreneurs may wonder how Canada revenue agency knows if they have paid enough source deductions. The notice when the entrepreneur files their T4 and T5 slips by the end of February. They simply look at the amount of source selections that the T4 slips say the entrepreneur should have paid, and compared to the amount of source deductions they have remitted through the year. If an entrepreneur has paid to little, Canada revenue agency is going to send them a letter asking to explain the discrepancy. At that point, the entrepreneur has a choice of simply paying the discrepancy, or explaining the discrepancy. However, if the explanation is not accepted by CRA, Edmonton bookkeeping says this could trigger an audit.
In order to go through payroll audit, Canada revenue agency will have an auditor request for all of the pay stubs, bank statements and PD seven eighty reports. The want to ensure that a business owner has not taken the money that should have been submitted to the government’s on behalf of their employees. It is a very good idea, for entrepreneurs prior to filing their T fours, to look at how much source deductions they owe, and verify that they have paid enough. They can completely avoid the payroll audit process if they ensure they have paid their source infections in full prior to filing their T fours and T fives.
Edmonton bookkeeping says that it can be very easy for entrepreneurs to file their T fours and T fives correctly. In addition, it is also easy to ensure that they are paying source deductions on time and in the correct amount, and if they do this, they can ensure that they are avoiding the things that will cause Canada revenue agency to trigger a payroll audit.