Business owners should understand that the filing deadline for T4 and T5 slips is the same every single year says Edmonton bookkeeping. These slips need to be filed by the last day of February every single year. Therefore, entrepreneurs need to ensure that they file these slips on time, as well as ensure that they have remitted the correct amount of source deductions so that they can end up avoiding penalties and triggering a payroll audits in their business.
The T4 and T5 slips even though they are recording different information, need to be filed on the same day, which is the last day of February. This is February 28 unless it is a leap year and then it is February 29. Not filing on time can actually trigger a penalty of a specific amount of money for every employee that an entrepreneur has, and being charge that amount every single day that they are late. This can add up quickly especially if an entrepreneur has many employees, or files quite late. Therefore, business owners can avoid this problem simply by filing on time.
The 2nd thing that entrepreneurs need to understand is what amounts are actually being recorded on each slip. The T5 slip is specifically to show Canada revenue agency what dividends were dispersed to each of the shareholders. Therefore, the business owners only need to worry about these slips if they have earned a profit in their business, and then dispersed those earnings to shareholders.
T fours on the other hand are where an entrepreneur specifies all of the payroll deductions that were withheld from their employees. If an entrepreneur has taken salary as well, they need to have a T4 slip for themselves. This means all of the income taxes, CPP and EI and an entrepreneur has withheld will be noted on a T4 slip. It is also important to note says Edmonton bookkeeping that an entrepreneur should also be withholding payroll deductions from their own paycheck. In addition to that, entrepreneurs must also be remitting source deductions on behalf of the business for CPP and EI as well. To miss any of those component parts of the source deductions, would mean filing the incorrect amount.
As long as an entrepreneur is sending source deductions on or before the deadline, Edmonton bookkeeping says they should not hear from Canada revenue agency if they happen to be underpaying. This will, at the end of the year, when an entrepreneur has filed their T4 and T5 slips. If the amount of source deductions that they should have paid does not match what they have, Canada revenue agency will issue a penalty, as well as a letter asking to explain the discrepancy. If the response is not satisfactory, that will end up triggering a payroll audit for an entrepreneur. Therefore, business owners should ensure that there remitting the correct amount of source deductions every month, that they can avoid multis and payroll audits in their business.
Edmonton Bookkeeping | What To Remember About Filing T4 And T5 Slips
There are 2 ways that entrepreneurs can avoid triggering payroll audits in their business says Edmonton bookkeeping. They can avoid paying their source deductions late, ensure that they are paying the correct amount. By ensuring they know how to do both of these things, can help ensure that not only are entrepreneurs avoiding triggering penalties that can be financially devastating to try to pay. Also, they can avoid a payroll audit which will have Canada revenue agency scrutinizing their entire business, potentially causing even more problems for entrepreneurs.
An entrepreneur simply has to learn how to avoid paying source deductions late says Edmonton bookkeeping. Therefore, they should understand when the deadline for that payment is. The deadline for source elections to be remitted to Canada revenue agency is the 15th of the month, in the month following payroll. Therefore, entrepreneurs should understand that if the payroll was run in March, the source deductions are due by the 15th of the month in April.
However, business owners should keep in mind that paying on the very last they might be dangerous. If something happens and they are not able to make that payment, or something happens and it arrives late they could incur penalties even if their intention was to pay it accurately. Therefore Edmonton bookkeeping recommends that entrepreneurs simply send the source that actions off to Canada revenue agency the same time that they run payroll. This is easiest, because an entrepreneur is already calculating the source deductions, meaning they do not have to do that calculation a 2nd time before they sent it off to Canada revenue agency. This will eliminate errors in the amount that they do send off to source deductions, and saves time for the entrepreneur. In addition to saving time, it ensures that entrepreneurs are never late because the source deductions are only do after they run payroll. If they do it all of the same time, by the time it is do it has already paid.
The next thing that entrepreneurs can do to avoid triggering a payroll audit in their business is to pay the correct amounts. While many entrepreneurs are familiar with all of the various amounts that they have to withhold from their staff including income taxes, CPP and EI. Business owners also need to understand that as a business owner, they also have to withhold source deductions from their paychecks. As well Edmonton bookkeeping says that entrepreneurs also need to remit source deductions on behalf of their business which is CPP and EI as well as. If an entrepreneur gets those source deductions wrong, and under pay, they will trigger audits and penalties.
In order to help keep track of the correct source deductions, not only can entrepreneurs use any payroll software or any accounting software such as QuickBooks or Sage. Also, Canada revenue agency has a program on their website that entrepreneurs can use to put the payroll amount into and then be shown how much source deductions they owe. With tools like these, entrepreneurs should never have to make mistakes when it comes to filing their source deductions so that they can avoid a payroll audits in their business.