CFO Services | How To Avoid Payroll Audits
People audits can be potentially extremely devastating for business owners if they have not been very careful hiring within their business says CFO services. How they hire a new business can make a huge impact whether they will get audited in the future or not.
The most successful companies can avoid this issue altogether by following some very straightforward rules of thumb when they start hiring in their business. The most important rule of thumb that they can adhere to is if they are hiring independent contractors in their business, they should not hire any contractors who are not incorporated. The reason for this is really simple, there is a risk that business owners take when they are hiring independent contractors, those contractors who do not have their own corporation, the business carries the risk that CRA may determine those contractors be considered employees of the business. Some businesses want to completely minimize that risk to their own business, by saying they will never any contractors who donít have their own corporations set up. Itís a very simple rule to remember, and it will completely and totally eliminate potential problems now and into the future forever. When business owners are hiring employees, all the how to do is make sure that they are taking off the appropriate source deductions from their paycheck, and then they never have to worry says CFO service.
However, the problem can creep in business owners had been hiring independent contractors that were not incorporated. Luckily says CFO services this problem can be fixed very very simply as well as very quickly. All you have to do is ask those independent contractors they can incorporate. Once they incorporate, the rest the business is totally eliminated. In order to soften the blow to that contractor, business owners may want to wait until that contractor is due for a raise, and then can tell them that if they incorporate, they will get a raise. If a business owner needs to switch contractor to an employee, all they need to do is just start taking the source deductions off of their paycheck. But how easy this problem is to avoid in the first place, and how easy it is to fix, there is no reason why business owners should risk is such a devastating penalty for almost no gain.
One of the reasons why business owners tend to not to fix this mistake once they realize they have made it says CFO services is that since they havenít had an issue with it before, and they havenít been caught, it lulls them into a false sense of security that they can just continue to get away with it. Unfortunately thatís a really troubling way to view things, because the longer a business ignores this problem, the hire that Baldie is going to be when CRA does find out.
Business owners should take care to avoid getting payroll audits in the first place, by being careful when they hire independent contractors, and they can also avoid getting payroll audits now by ensuring that they fix any issues in their business immediately.
Payroll audits can be a hugely devastating financial blow to businesses said CFO service. Business owners who have gone through an audit will be expected to pay retroactive payroll remittances, as well as penalties and interest on top of those remittances if there contractors have been deemed employees by CRA. This is extremely avoidable problem, by adhering to some important and easy hiring practices. If a business owner has already made this mistake business, they should know that it is an extremely fixable problem says CFO service. Because of how easy this is to avoid and easy it is to solve, there is no reason why any business should run into a problem with payroll audits.
One of the reason why business owners donít believe itís a problem for them, is because they have been doing it for so long, and theyíve never been caught yet. Some people would point out that the longer they do it, the higher the chances are that CRA will catch them eventually. And unfortunately for that business owners the CFO services if they do get caught, the longer theyíve been doing it will mean higher amount they will eventually have to pay back. For such a avoidable problem, the penalty is really huge.
If business owners understand the process, maybe they would be more empowered to avoid this problem in the future said CFO services. When the business gets there payroll audited by CRA, business owners may be able to very easily persuade CRA to the rule in favour of the business owner. However this is rarely the case because the soul job auditor is to be extremely judicious at who gets deemed contractor because thatís how CRA collects their taxes. If those independent contractors and not in corporations, CRA will ask the business owner but also employees and contractors in the business several questions to determine the answer. Often the CRA auditor is going to call the business and asked to speak to those people and speak to them without the business ownerís knowledge in order to get their answer. They will do their own research and come to their own opinion. Once theyíve made their judgement, the business owner will get the assessment in the mail, and there is no appeal process.
By understanding how easy this problem is to avoid says CFO services as well as how easy it is to fix, there is no reason why any businesses should fear a payroll audit. The consequences to the business can be immediate and severe. Any businesses who are hiring should make efforts to ensure that they hire correctly. if they have contractors who should be deemed employees, they should change that. They have been contractors for unincorporated, business owners should help with that contractor and suggest they get incorporated.