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Edmonton Small Business Accountant | How To Avoid Payroll Remittances Issues
Entrepreneurs who end up being behind on payroll remittances, or have been assessed with not paying enough, often end up being assessed penalties that can seriously impact the finances of their businesses Edmonton small business accountant. As Michael Gerber, the author of the E myth has been quoted as saying, ”the final assumption is: if you understand the technical work of the business, you understand a business that does that technical work.” Many business owners are extremely good at what they do in their business, but that doesn’t necessarily mean that they are good at operating that business. Learning how to become a business owner has sharp learning curves, and if business owners aren’t aware of what the needs to do and what they should avoid, they can end up running into huge problems in their business. For example, business owners that don’t submit payroll remittances to CRA properly, and end up impacting their business so much that their business may not recover.
The two problems that business owners can avoid when it comes to submitting payroll remittances says Edmonton small business accountant is not paying enough, and not paying on time. Both of those issues are extremely easy to avoid if a business owner knows what the expectations are, and what they need to do to avoid them. If they do not avoid these problems, CRA’s penalties for late payments, missed payments and shorted payments, are steep and fast.
Most businesses are required to have their remittances paid to CRA on the 15th day of the month, in the month following when payroll was run. All of the payrolls that were run in one month need to have all of their remittances paid to CRA by the 15th day the following month. Edmonton small business accountant says one easy way that business owners can simply avoid missing this deadline, is to make their payment to CRA at the same time that they are running their payrolls. Since they are already calculating source deductions for each of their employees, business owners can easily add that amount of incense that payment in. If they do not send the remittances at this time, then they have to member to do it, and then they have to sit down and figure out how much they owe all over again. It’s very easy and fast to do it at the same time.
The next problem that business owners can easily avoid, is not paying enough in remittances. Business owners should be aware that in addition to the three things that business owners are withholding from their staffs pay: taxes, CPP as well as EI. Business owners also have to submit contributions themselves from their business finances. They also have to pay EI and CPP of 7.37%. By understanding that there is additional amounts that they have to pay in addition to what they have withheld from their staff’s paychecks, business owners can avoid underpaying their CRA payroll remittances.
Too many times, employers can run into problems with CRA that can be financially devastating to their businesses Edmonton small business accountant. One of those reasons, is if business owners don’t submit payroll remittances to Canada revenue agency properly. The penalties that business owners face when they pay incorrectly are huge and can be very devastating for an entrepreneur to overcome. Since 29% of all entrepreneurs who had to close the door to their business, said that running out of cash was the main reason that their business failed. Business owners can avoid payroll remittances issues in their business, and avoid running into financial difficulties because of it.
Business owners may want to consider not including their spouse as a director in their business, because if they run into any problems with CRA, they may be able to protect some of their assets by only having one family member be a director in the business. Since directors and corporations are personally liable for payroll tax, if they run into a problem and are unable to pay that payroll tax and penalties, even if their business shuts down, directors are on the hook. That’s why if only one spouse in the business is actually a director, CRA is limited to what they can do to collect money from that director says Edmonton small business accountant.
The reason why business owners may run into huge problems with CRA due to payroll remittances problems, is because the penalties associated with paying late, is a payment or underpaying, is extremely steep. Business owners can face up to 20% daily interest charges on the amount that payroll Canada revenue agency. Not only are the penalties steep says Edmonton small business accountant, but CRA is aggressive in collecting remittances, especially when compared to other balances. The penalties are so steep, because CRA hopes that it will be a deterrent for business owners to avoid missing payments or paying late. The reason CRA takes the so seriously, is because of the few people remittances as a trust fund. If business owners miss a payment, or underpaying, they see that as misusing trust funds. The money belongs to the government, and the business owner has collected it on behalf of the government and then didn’t send it in. CRA takes this extremely seriously.
Business owners can avoid most of the penalties simply by avoiding being late on their payments. Even though payments are due on the 15th of every month for most businesses, that doesn’t mean businesses have to wait until that they in order to pay says Edmonton small business accountant. Business owners should get into the habit of sending in their payroll remittances same time that they run their own companies payroll. Since they already know the amount of the source deductions, they know how much they should be paying CRA. By running this the same time, business owners can avoid being hit with late penalties. If you are in need of help figuring out your payroll, don’t wait to give us a call so we can lend a hand.