Edmonton Small Business Accountant | Canadian Payroll Tax Risks
The problem is that many business owners face while running their business says and then small business accountant, is that they come to their accountant, and are behind on their payroll remittances, and therefore are being assessed penalties. Helping business owners understand how to properly pay payroll remittances, can help them appropriately plan how to pay their payroll remittances, avoid payment too little, or missing payments completely. There are several things that business owners can keep in mind when they’re learning how to submit their payroll taxes, in order to pay the correct amount and protect themselves.
The first thing that business owners should know this is Edmonton small business accountant, is how much employers have to pay on top of the source deductions they have collected. Business owners need to understand that they have to remit to CRA only the amount of taxes that they have collected from an employee, but they also have to pay payroll remittances themselves. This amount is 7.4%, and has just gone up this year. If business owners understand that they know they have to pay a contribution themselves in addition to what they’ve taken from their employees, can help them appropriately figure out how much money to send to CRA for their staff and for their own contribution.
It’s also important that entrepreneurs no there are five components of CRA remittances, and two of them are not automatically deducted an employee’s check. Those five contributions are, employee CPP as well as the employer CPP, the employee EI as well as the employer EI, and tax. By understanding all of the various remittances that must come off of the employee’s check, and what other remittances are needed to be paid can help a business owner take payroll remittances off their place check, and the correct batch they should contribute themselves.
Edmonton small business accountant also says that it’s important to know when those payroll remittances are due to be paid. They should be paid on the 15th day of the month, the month after the paycheck was issued, however business owners should not wait that long, they should pay CRA at the time of doing the employees checks, in order to avoid getting behind in payments.
The reason why it’s so important not to get behind in payments, is because the penalties are very severe for business owners who are even a single day late on submitting their remittances. These can be up to 20% and those penalties are due after a single day of missing the payment. It’s extremely steep and business owners should avoid this penalty at all costs.
It’s important for business owners to know how much they need to send off to CRA not only from their employees remittances, but from themselves, in order to pay the correct amount of payroll remittances, and pay on time. They understanding this says Edmonton small business accountant, business owners can avoid problems in their business, and know that they are paying properly.
One of the major problems that business owners face in business today, is running out of money says Edmonton small business accountant. Because of this, business owners often come to their accountant with the problem of being behind on their payroll remittances, and in the getting assessed penalties. By understanding how to properly pay payroll remittances, business owners can effectively plan how they’re going to pay CRA source deductions, and avoid running into problems and being assessed additional penalties. There’s several things that a business owner should know when they payroll remittances that can help them avoid problems.
Even though the payroll remittances payment is due on the 15th day of the month, the month after the paycheck was issued, Edmonton small business accountant recommends that entrepreneurs do not wait that long in order to pay their source deductions to CRA. Best practices is that business owners should send off their source deductions payment same day that they do payroll, since there already calculating that amounts. Another reason is because CRA is extremely relentless when it comes to collecting remittances. Especially when compared to collecting other balances. The reason for this, is that CRA the use this money as a trust fund, it’s not the business owner’s money, and by not paying the money, CRA these it as using other people’s money to run their business. This is extremely serious, and by missing payments of source deductions, can get business owners into big problems very fast.
Business owners should also understand that they and other directors of the company are personally liable for this payroll tax. Even if they go bankrupt, they will still be on the hook for this amount. CRA sees this extremely seriously and will ensure that they can their money either way. Edmonton small business accountant says the best way to ensure a business owner can avoid this problem, is by planning The tax payments ahead of time, and paying them early. However, if the business owner is in a risky business want to protect themselves a bit, and CRA is not able to go after a spouse that isn’t a direct in the company. This may be away for business owners to mitigate risk if they think that there is a potential they may not get paid for a job, and then be on the hook for payroll source deductions.
It’s also important to note that CRA will be able to find out if the business is behind on their payroll remittances once they file their T4. This T4 will include a list of all of the remittances that should have been paid throughout the year, and if the business owner is in trouble with the CRA. The Canada revenue agency can always do payroll audit, but once that T4 is filed, the business owner will be getting a demand for the shortfall within 30 to 90 days. Not only will they have to pay the shortfall, there will be penalties added to finance, and it may even trigger an audit.