Edmonton Small Business Accountant | Avoiding Payroll Remittance Issues
Business owners can get into serious trouble with CRA if they are not remitting source deductions properly says Edmonton small business accountant. These problems are not only avoidable, but the problems they face could be severe and could potentially threaten the health of their business. By knowing what ways they can avoid running into problems with source deductions, business owners can ensure that they are paying their employees properly, and paying the right payroll source deductions.
Business owners are often aware of the amount of source deductions they need to send to CRA that they have collected off of their staff, they don’t always know that there’s additional money that they have to pay says Edmonton small business accountant. A business owner also owes the CRA for a contribution from their own business. That amount is 7.37% and is in addition to the amount that they collect from their employees. My understanding this, business owners can avoid having a shortfall on their source deductions at the end of the year.
Employers are often aware of three components they must collect for CRA, those being employee CPP an employee EI as well as tax, but business owners also need to be aware that they also owe employer CPP and EI. Three of those amounts are deducted off of their employees checks, and two of them are what the business owner personally contributes. I understanding all of those amounts, business owners can not only collect the correct amount from their staff, but can also contribute the correct amount from their own business.
Business owners should also be aware of the due date of their payroll remittances says Edmonton small business accountant. The due date for payroll remittances are the 15th day of every month, the month after the paycheck was issued. By knowing that business owners have until that date to pay their source deductions, it can be prepared to pay it on time every single month. Although, many business owners find it extremely beneficial to pay their source deductions at the exact same time that they are running payroll in their business. Many business owners find that not only do they are less likely to forget, it’s also faster and easier because they’re already doing the calculations for the source deductions and writing paychecks.
Edmonton small business accountant recommends that business owners avoid paying late at all costs, because the penalty for being even a single day late and submitting their remittances can be huge. Business owners can face up to 20% of interest charges on the amount that is due, do the day after they were to pay that amount. That is an extremely steep penalty, and an aggressive timeline that is accrued in. CRA takes nonpayment of source deductions extremely seriously and they are extremely aggressive in collecting that money. It’s extremely important for business owners to understand how aggressive this is, in order to avoid being late with their payments.
Wade payroll remittance problems can help business owners operate their business says Edmonton small business accountant. The penalties for underpaying source deductions or paying late is huge and CRA is quite aggressive in collecting, so it’s definitely in the business owner’s best interest to get educated on how to avoid those issues as soon as possible.
One of the first things business owner should learn when they have employees that they start paying through payroll, is how much they need to pay in source deductions to CRA. Most employers know about the employee CPP, EI, and tax that are directly taken off of employees check, but they may not be aware that there’s additional amounts that they have to pay in source deductions to the Canada revenue agency. These additional contributions are the employer CPP and employer EI, and they are the amounts that the business owner must pay themselves to CRA. This works out to roughly 7.4% in addition to the amounts they collected from their employees. This amount recently when up in 2019, and all business owners are expected to pay it. By not paying the full amount, business owners are creating a shortfall in their source deductions that CRA will eventually find out about.
Business owners should also be aware that simply by filing their remittances even one day late, can trigger huge penalties. By being one day late on their remittances, business owners can face a 20% interest penalty. That’s after one day of having a late filing. Edmonton small business accountant says that not only is this amount huge, but Canada revenue agency will be extremely aggressive in collecting that money. It’s definitely not advised for business owners to be late in paying, or submitting to little of the money they should.
The best way for business owners to avoid having a late payment on their source deductions, is to get into the habit of sending in the payment at the same time the business owner is doing payroll. Edmonton small business accountant says that this is extremely easy for businesses to do, since they are already running how much to deducted from the employees checks, that continuing to calculate how much they should give CRA and then sending a check at the same time they send a check to their staff, is an easy habit to get into. Even though the payments aren’t due until the 15th day of the month in the month following the paycheck, that’s leading a lot of things for a business owner to remember. If business owners can trigger huge interest penalty just by being a single day late, to avoid this, they should aim to pay early and in a way that makes sense.
Business owners should also understand that they will be held personally liable for source deductions that are owed to CRA whether they still own their business or not. Businesses that are ready to cash flow problems, may think that it can be effectively by extra time, and when it doesn’t work, the end of having to pay for that mistake for years to come.