There are a few things that can end up triggering a payroll audit for entrepreneurs says Edmonton bookkeeping. If they have filed their T4 or T5 slips late, if they have paid their source deductions late, or if they have paid the incorrect amount. It can be very easy to learn all of the things that an entrepreneur must do to avoid a payroll audit as well as being hit with penalties associated with incorrect source deductions payments. However, since it is one of the steepest penalties that Canada revenue agency faces, it is important that entrepreneurs learn these easy things early on in their business so that they never have to worry about going through a payroll audit.
The first thing that entrepreneurs need to understand, is what a T4 and T5 slip is. Edmonton bookkeeping says that the T5 slip is for recording all of the dividends that all shareholders have taken from the corporation. Since dividends are disbursement of the earnings, only if a business has generated earnings, and only if shareholders have taken those earnings as dividends will they get T5 slip.
T4 slips on the other hand says Edmonton bookkeeping will need to be created for every single staff that has taken a salary including the business owner themselves. This is where all of the source deductions are recorded. This means all of the income taxes, EI and CPP that have been withheld from staff paychecks will be listed here. If an entrepreneur has taken a salary, they need to ensure that they have had those taxes withheld from their paychecks. And in addition to that, an entrepreneur also needs to ensure that they are business has contributed CPP and EI as well as.
Once an entrepreneur understands what a T4 and T5 slip is his Edmonton bookkeeping, they then need to understand the filing deadline. These need to be filed by the last day of February. The reason why, is because this is how employees show Canada revenue agency the taxes that they have paid through the year. If an entrepreneur has filed their T4 and T5 slips late, they should expect to be hit with a penalty. They get assessed a dollar amount penalty for every employee they have, for every day that they are late in filing. This can add up significantly very quickly says Edmonton bookkeeping. Therefore it is important that entrepreneurs avoid filing their T4 and T5 slips late.
It is very important that entrepreneurs not only know what a T4 and T5 slip is, but the reason why it needs to be filed on time every single year. By ensuring that there filing their T4 and T5 slips on time, they are avoiding hit with penalties that could be financially devastating to a business. Since 29% of failed entrepreneurs say they failed because they ran out of money, anything an entrepreneur can do to avoid being hit with a penalty is important to know.
Edmonton Bookkeeping | What Is The T4 And T5 Filing Deadline
It is very important that entrepreneurs ensure that they are filing their T4 and T5 slips on time says Edmonton bookkeeping. If they are late, they can trigger a penalty. But also, T fours need to be given to staff, so they can send those slips to Canada revenue agency so that they can show the government how much they paid in taxes.
However, but a T4 slip will also tell Canada revenue agency is how much source that actions on entrepreneur should have paid throughout the year. Edmonton bookkeeping says upon filing, Canada revenue agency will compare the amount that an entrepreneur should have paid against the amount that they have actually permitted to date. If there is a discrepancy, this could end up triggering an audit as well as penalties.
Because of this, best practices would be for entrepreneurs to calculate their T4 slips, and look at how much they should have paid in source that actions. If they have accidentally underpaid these source that actions, they should send a payment off to Canada revenue agency prior to finishing filing their T4 slips. As long as Canada revenue agency has the amount in full for an entrepreneur files, they can avoid triggering an audit or penalty. Therefore, it is very important that entrepreneurs are getting the T4 and T5 slips prepared well in advance of the deadline.
The other thing that entrepreneurs can do to ensure that they are avoiding a payroll audit or penalties says Edmonton bookkeeping is paying on time. While Canada revenue agency will not contact an entrepreneur if they are paying too little of the source deductions, as long as they are paying on time. This is why it is very important to double check the T4 before filing it. However, Edmonton bookkeeping says that if an entrepreneur pays their source deductions late, they will hear from Canada revenue agency right away.
The deadline to submit payroll remittances to Canada revenue agency is the fifteenth of the month following payroll. That means if payroll was run in May, June 15 is the deadline to remit source deductions. However, Edmonton bookkeeping recommends entrepreneurs submit source deductions at the same time that they run payroll so that they can avoid risking paying late. Since source that actions are only do after payroll is one, if they submit them at the same time, they are avoiding ever being late. Also, Edmonton bookkeeping says that this saves a significant amount of time, because in order to run payroll, an entrepreneur will already have calculated the source deductions. They can avoid calculating them a second time, simply by sending that amount to Canada revenue agency immediately.
Learning how to avoid triggering a payroll audit, and triggering penalties by filing their T4 and T5 slips properly, can benefit entrepreneurs. By never putting their business into financial difficulties by triggering penalties, and not having to go through the payroll audit process will help entrepreneurs significantly ensure that there doing the right things to help grow their business.