There are several ways that entrepreneurs can avoid triggering a payroll audit says Edmonton bookkeeping. However, many entrepreneurs while wanting to avoid this are unaware of what a payroll audit is. Therefore, in order to help entrepreneurs understand why they should avoid this situation, they should understand what going through payroll audit is like.
The first thing that entrepreneurs should understand, is that a payroll audit can be very time-consuming as well as very disruptive to their business. Entrepreneurs may also be required to ask their Edmonton bookkeeping company for information, or their accountant to prepare statements, which can end up costing them more money. This is in addition to the penalties that business owners often are assessed in addition to the payroll audits.
Payroll audits are triggered when an entrepreneur miss handles source deductions. Source deductions are the taxes that an entrepreneur is expected to withhold from their staff’s paycheck, and remit to Canada revenue agency. If they have made this late, paid the wrong amount, or not filed their T4 slips properly this can trigger a payroll audit. Edmonton bookkeeping says that the reason why filing the T4 slips late would trigger a payroll audit, is because this is the document that tells entrepreneurs as well as Canada revenue agency how much source deductions should have been remitted. Therefore, by keeping these three things in mind, entrepreneurs can simply avoid triggering a payroll audit completely.
However, if an entrepreneur finds themselves in this situation, they should keep in mind that the Canada revenue agency auditors job is to look through all of the entrepreneurs finances in order to determine where the money from the source deductions that should have been remitted went. Their white to look to see if an entrepreneur use that money to fund corporate expenses, or if an entrepreneur used that money to pay themselves. Either way, Edmonton bookkeeping says that Canada revenue agency sees a misuse of source deductions funds as one of the most serious of fences that an entrepreneur can make. Because this is technically government money, they consider it theft, or an abuse of government money.
If a business owner has been hit with payroll audit, they should expect the auditor to request copies of all of the pay stubs in the business for the past year, to remit bank statements, as well as provide something called a the D seven A report, which will show the auditor but source deductions should have been made. The very best case scenario, is that the entrepreneur will have the money in their business, that can be handed over to CRA, and the only incur penalties for submitting it late.
Even though it can be very simple for entrepreneurs to learn what they can do to avoid a payroll audit in their business, it is often easier said than done says Edmonton bookkeeping, and entrepreneurs may find themselves faced with the situation. If that is the case, they should know what to face. However, by learning how will affect their business can be enough of a deterrent for entrepreneurs to learn how to pay source deductions accurately and on time so that they never find themselves in this position.
Edmonton Bookkeeping | What Is A Payroll Audit
business owners should understand that if they mishandle source deductions payments, that can end up triggering a payroll audit says Edmonton bookkeeping. There are three different ways that entrepreneurs can trigger a payroll audit. If they learn what these things are, and they will be able to avoid them in their business, and never have to go through the disruption and hassle of a payroll audit.
The first thing that entrepreneurs can do to avoid triggering a payroll audit is simply to file their T fours on time. T fours are due on February 28, or February 29 in the leap year. Edmonton bookkeeping says the reason why this is the deadline, is so that entrepreneurs can get them to employees so that employees can prepare their personal tax returns before the April 30 date. To not file on time, not only triggers a payroll audit, but triggers penalties of a monetary value being assigned per employee, being compounded for every day that an entrepreneur is late.
The second way that an entrepreneur can trigger a payroll audit is by paying the source deductions late. Even though the fifteenth of the month every month following when payroll happened is the deadline, Edmonton bookkeeping recommends that entrepreneurs never to the last day in case something goes wrong, and Canada revenue agency does not get that payment on that date. Best practices would be for entrepreneurs to simply remit their source deductions at the same time as running their payroll. This way, they can ensure that they will never pay their source deductions late.
The next thing that entrepreneurs can do to avoid triggering a payroll audit says Edmonton bookkeeping is pay the correct amount. The T4 slips well show entrepreneurs how much payroll deductions should have been paid, and if they paid the incorrect amount, that can trigger a payroll audit. If entrepreneurs are having a hard time calculating the amounts, they should know that there is a calculator on the CRA website that help entrepreneurs. All they have to do is enter their payroll information into the program, and it will show them how much source deductions should be withheld. Also, entrepreneurs can use any payroll or accounting software such as QuickBooks or QuickBooks online. And in addition to that, they can contact their Edmonton bookkeeping company to help them out.
By understanding what things they need to avoid in order to ensure that they do not get hit with a payroll audit, Edmonton bookkeeping says that entrepreneurs not only can ensure that they do not have to go through the process, but they also owned have to pay the penalties associated with it as well. Helping entrepreneurs avoid paying unnecessary fines can help ensure that there keeping their finances healthy, so that they can stay in business for a long time.