It is very important that entrepreneurs know how to calculate source deductions and pay them prior to needing to run payroll in their business says Edmonton bookkeeping. There is not a lot of information that a business owner needs to remember, however, if they are not aware, and they do it incorrectly, they could not only be hit with severe penalties, they might even trigger a payroll audit in their business. Therefore, when entrepreneurs learn what they need to know about calculating source deductions and remitting them to the Canada revenue agency, they can do it accurately from the beginning, and never encounter problems from CRA.
One of the first things that an entrepreneur needs to know is how to calculate the accurate amount of source deductions that they are going to be submitting to the Canada revenue agency. They have five components that they need to be aware of and be able to calculate accurately in order to ensure that they are submitting the correct amount says Edmonton bookkeeping. These five components are income tax, CPP and EI that must be withheld from their employee’s paychecks. But also the employer portion of CPP and EI that an entrepreneur must pay from the business. Not only does an entrepreneur need to pay this on behalf of the business, they also need to be aware that the EI portion that they must pay will be one point 4% higher than what they calculate for their employees. If an entrepreneur is paying themselves a salary as well, they must ensure that they are calculating and withholding CPP and EI from their own paycheck as well.
Not only do entrepreneurs need to calculate the correct amount of source deductions, they also must pay it on time says Edmonton bookkeeping. Payroll remittances are due to the fifteenth of the month following when payroll was run. That means, if an entrepreneur ran payroll in January, they need to have remitted the correct source deductions to Canada revenue agency by February 15. That means, and not in our must create a plan that has them submitting mittens is prior to the fifteenth so that they do not encounter problems that will cause them to have remitted late. Lecture running and Internet problems can happen at any time, and that should not be the reason that an entrepreneur is unable to have paid their remittances on time.
Edmonton bookkeeping says a best practice that entrepreneurs should get into the habit of doing is to submit source that actions to Canada revenue agency at the same time that they are running payroll. They are already calculating the amount that must be withheld from their paychecks, that it is going to be very simple for an entrepreneur simply to create a payment to Canada revenue agency for that amount. If they remit this at the same time that they run payroll, a business owner will never run the risk of filing late.
By learning how to calculate source elections accurately and pay them on time can help notch manure avoid running into problems. By creating a plan ahead of time, an entrepreneur will be able to focus their time and attention on or important objectives of the business such as sales and marketing so that they can continue to grow their business.
Edmonton Bookkeeping | What Business Owners Need To Know About Source Deductions
In order to help entrepreneurs calculate and pay source that actions accurately says Edmonton bookkeeping, a great strategy is for business owners to create a checklist to use. Checklists are an important tool for entrepreneurs to develop in their business that will allow them to create efficiencies, and scale up their business. They should do this with payroll taxes, not only so that an entrepreneur can hand it off to their staff as needed, but so that they avoid making mistakes that could end up costing them huge penalties or triggering an audit.
Even if an entrepreneur knows the correct source deductions to withhold from their employees’ checks, and they also know when to file them to avoid late charges, Edmonton bookkeeping says that entrepreneurs should still get into the habit of checking their T4 slip before setting it off to CRA. The reason why is because if an entrepreneur happens to have under page throughout the year, when they file their T4 slip, CRA will be able to see if there is any discrepancies. If there are any discrepancies, this could trigger a payroll audit that not only will take a significant amount of entrepreneurs time, but could end up costing entrepreneur even more money.
Therefore, an entrepreneur should look at their T4 slips prior to filing them, and if they find that they have not submitted the correct amount, can make a lump-sum payment to Canada revenue agency for the amount that is left owing prior to filing their T4 slip. That way, the amount that they have paid matches the amount on the slip and they will avoid triggering an audit in their business.
It is also important for entrepreneurs to take note that the Canada revenue agency is very aggressive in collecting remittances owed to them says Edmonton bookkeeping. The reason why they are very aggressive is that they consider the money that an entrepreneur withholds from their employees checks to be trust fund money collected on behalf of the government. It is not the business owner’s money to use, and if they do not remit it correctly, they view it as misusing government funds. Therefore, everything that an entrepreneur can do to avoid paying incorrectly will be beneficial to their business.
By understanding everything that an entrepreneur must do in order to remit source deductions accurately can help them create a checklist that can be used by them or anyone else in their business to run payroll accurately. This will allow a business owner to be able to focus on more strategic priorities in their business that will allow them to continue growing their business, without worrying about payroll.