Edmonton Small Business Accountant | How To Avoid To Cra Payroll Problems
Entrepreneurs who end up not knowing how to properly calculate source deductions from their employees checks, or are unaware of all of the various components of CRA remittances, end up being hit with penalties and interest charges that their business may not recover from says Edmonton small business accountant. There are important things that business owners should know ahead of time before running payroll in order to avoid payroll problems with Canada revenue agency that could cost the business far more money in the long run and potentially put the business at risk.
Knowing how much to remit to CRA is extremely important says Edmonton small business accountant. They must be aware of all of the various components of CRA remittances in order to pay them all properly. There’s five components that business owners must know about in order to pay them properly. They are CPP and EI both on the employer and the employee’s side, as well as tax. That’s correct, business owners themselves also needs to make a contribution to CRA. The amount that they should calculate is 7.4% of the entire source deductions in addition to the source deductions they take off of their employees checks. By understanding that they need to pay an additional percentage of money themselves, will help business owners avoid getting penalized by having a shortfall in their payroll remittances at the end of the year.
If business owners have missed a payment, or have paid too little, they will be able to find that out as soon as they file their businesses T4’s. Once they submit that information that tax time, CRA will see what a business should have paid and what they have paid. If there is a shortfall, the business is in trouble. Edmonton small business accountant said if there is a shortfall, within 30 to 90 days, they will be expected to pay the shortfall back, as well as the 20% interest, and they may even trigger an payroll audit in their business. The CRA has the ability to audit the business at any time, but by making a mistake like this, business owners are likely to trigger an audit that.
The next thing that business owners can do in order to avoid running into problems with payroll says Edmonton small business accountant, is by paying their remittances on time, or even early. Edmonton small business accountant says even though a business has until the 15th they the following month after the payroll was issued, business owners should not wait that long in order to pay Canada revenue agency. The reason for this, is if a business owner waits until the very last day before they submit, if they run into problems, if they get sick, or a variety of reasons end up not being able to pay on that exact date, there is no days of grace that they have in order to pay it. Since the penalties that the CRA imposes are very fast, business owners who have missed their filing by a single day can be hit with the penalty
Avoiding payroll problems in small businesses is not difficult says Edmonton small business accountant. However, it can be very easy to make errors if the business owner is not sure of all the different requirements they have been paying payroll. Here are the most common things that a business owner should know in order to avoid payroll problems.
One of the most important things that it entrepreneur needs to know when they are paying source deductions to Canada revenue agency says Edmonton small business accountant, is when the needs to make their payment. It can be extremely easy to miss their payment if they are not aware of when they are filing deadline is. A business owner must have their source deductions paid to CRA by the 15th day of the month, in the month following when the paycheck was issued. However, business owners should know that they don’t have to wait until that deadline in order to pay CRA. In fact, best practices are for business owners to pay their source deductions at the same time that they are running their payroll. Not only is this easy for business owners to remember, it’s also easier, because they are already figuring out the source deductions from each employee’s check. All they have to do is add them together at their additional amounts, and send the amount to CRA. By doing it this way, if something happens at a business owner misses that date, they’re not being hit with severe penalties.
Another important thing for business owners to know when it comes to submitting source deductions to CRA, is how much money they need to pay. Most employers are aware of the CPP, EI and taxes that they have to take off of their employees checks, but they may not be aware that they also have a contribution themselves to paid to CRA. Edmonton small business accountant says the amount that the should include in their payments to CRA is 7.37%. This is to cover the employer CPP and the employer EI. By not being aware of all of the various components of the CRA remittances, a business owner can risk having a shortfall in the amount they pay.
If they miss paying, or if they have been paying a shortfall, CRA will be able to discover this very easily at the end of the year. As soon as a business owner files or T fours, CRA will be able to check the amount of source deductions that should have been paid against the source deductions that have been paid. If there is a shortfall, CRA will be penalizing the business with 20% interest charge as well as expecting the entire shortfall amount. Business owners can expect that within 30 to 90 days of submitting their T fours they could hear back from CRA. if you don’t want to have to hear back from a cra then you should call us ahead of time so you can learn how to avoid them.