Edmonton Small Business Accountant | How To Eliminate Payroll Remittance Problems
Out of all of the ways that business owners could make errors with taxes, Canada revenue agency sees payroll remittance errors as some of the most serious mistakes a business could make says Edmonton small business accountant. Not only are the penalties for filing late or filing the incorrect amount huge and swift, by not paying payroll remittances properly, business owners could open themselves up to getting audits and interest charges that are hard or impossible to recover from. Business owners can avoid huge problems from the CRA by understanding what their requirements are when submitting payroll remittances, and working with their accountant to create a plan to avoid all of those issues.
Business owners who submit payroll remittances even a day late, face up to 20% and interest charges per day as a penalty. Edmonton small business accountant says this can add up extremely quickly, if business owners are unable to pay either the remittance, or the interest. For that reason, business owners should ensure that they pay the remittances as soon as they withhold them from their employees check. It is not worth the risk for business owners to withhold the money, and then use that money to increase cash flow in their business. If businesses need to increase cash flow in their business that desperately, they have bigger problems that they need to deal with. The problems that they could get into by filing remittances late, are not worth small benefits they get from using those funds to operate their business for short period of time.
Canada revenue agency sees not paying payroll remittances probably is a huge abuse of money that they consider trust fund money. It is not the business owners money, and CRA sees it as misusing money that is not theirs. If business owners need to increase cash flow in their business, their often better off using a high interest credit card than they are payroll remittances because of the penalties they face. Because they view it so seriously, not only are the penalties hi, but CRA is extremely aggressive when it comes to collecting that money. Edmonton small business accountant also warns that by failing to pay on time can trigger a payroll audit which could mean even bigger problems for the business.
To avoid paying their remittances late, the recommendation for business owners is to submit their remittances on the same day that they do payroll. If they have the money for payroll, they should have money to submit to CRA for the remittances. Not only is this best practices to avoid late payments, but it is also easier as well as faster to do since they are already calculating the source deductions. Even though business owners have until the 15th day of the month the month after the payroll periods, they should avoid paying on the very last they. Even if they have every intention in paying on time, but something happens and that payment isn’t received on that exact same day, they will be hit with huge penalties that are not worth it.
Out of all the problems that business owners face in their business and with CRA, payroll remittance problems should be avoided at all costs says Edmonton small business accountant. The reason for this, is because CRA views payroll remittance problems as extremely serious. They will have more grace for business owner who is behind on their corporate tax, or with people who are late on their personal taxes more than they will be with business owners who have not submitted payroll remittances properly or on time. Business owners can avoid huge penalties simply by understanding how much they should pay, and when they should pay it.
The first thing that business owners should know, is how much they need to submit to Canada revenue agency for payroll remittances. Edmonton small business accountant says there are five components to CRA remittances that business owners need to submit every single payroll. Those components are the employee CPP that comes off of their check and the employer also must pay CPP that they take out of their business that is equal to the amount that the employee pays. The employee also has EI which is deducted off of their check by the employer. The employer also has to pay EI from their own finances, however it is 1.4 times the amount that employees pay. And there’s of course the tax that business owners withhold from their employees paychecks. They need to pay all five components every single payroll in order to avoid penalties.
The next thing that business owners should be aware of says Edmonton small business accountant is when they need to pay their remittances. The deadline for most businesses is the 15th day of the month, and the month following and the payrolls were run. Some small organizations can submit their remittances quarterly and larger companies often have to submit twice per month, but business owners should know that for the most part there due date is the 15th of the month. However, they can pay their remittances any time before that, and in order to avoid problems by filing late, business owners should aim to file early. Best practices says Edmonton small business accountant is for business owners to submit payroll remittances to CRA on the same day and at the same time that they are running their payroll. It is easier and faster, because business owners are already calculating the source deductions that must be taken off of each employees check. In order to make their payment to CRA, all business owners need to do then is and all those totals up, and their own contribution and send that payment in. If they don’t send their remittances at that time, then they have to go back and figure out all those amounts again and then remember to send it before the 15th. If you require our assistance in order to help your business then dont wait to give us a call.