Edmonton Small Business Accountant | How To Eliminate Payroll Remittances Issues
One of the main problems that entrepreneurs face in business today says Edmonton small business accounting, is the risk running out of cash. Half of all entrepreneurs will be out of business within five years, and 29% of them say that running out of cash was the reason why their business failed. Business owners who approach their accountants because they are behind on payroll remittances, and are being assessed penalties could have easily avoided problems in their business simply by being aware of what they are expected to do when it comes to submitting payroll remittances in their business. The penalties they face for making errors, are often so severe, that many businesses need to work extremely hard to overcome them, and some never do.
Business owners need to know that there payroll remittances are due to the CRA by the 15th of every month. There is a 20% interest penalty for businesses who miss that deadline says Edmonton small business accountant. That interest charge is daily, and CRA is very relentless in collecting it. Entrepreneurs can avoid this happening in their business simply by ensuring that they pay their source deductions before the due date. Although they need to have those payments done on the 15th of each month, as is owners don’t need to wait for the 15th in order to pay CRA. 1 Great Way to submit payroll remittances in a way that will ensure that they don’t pay late, is to make the payment to CRA at the same time that the business owner is running payroll. They are already calculating source deductions, all business owners have to do from there is add up all of the totals and make the payment to CRA for that amount. By sending payment to CRA at the same day they do payroll, business owners will never run the risk of paying late.
In addition to avoiding paying late says Edmonton small business accountant, business owners need to understand exactly what they must pay to CRA for their payroll remittances. There are five components total that business owners must pay CRA in order to avoid being shortfall. Employers must withhold CPP, EI and taxes from their staffs checks, but they also must make a contribution themselves. They also need to pay to CRA themselves, CPP and EI, in amounts that total 7.37%. This is in addition to the source deductions they have already withheld from their employees pay. By knowing how much they have to submit to CRA, business owners can easily avoid paying too little and running into trouble.
If business owners have been unknowingly sending payments that aren’t enough, CRA may notice this throughout the year, however once a business owner files their year-end taxes, if CRA hasn’t already noticed, they will. In the year-end taxes CRA will be able to see how much the business owner should have paid, as well as how much they have paid. If a business owner hasn’t paid enough, they should expect within 30 to 90 days, that CRA will contact them, not only with collections calls to pay the entire amount that they owe, business owners should also expect to get a 20% interest penalty and maybe even an audit.
When business owners fail to pay their payroll remittances properly says Edmonton small business accountant, they can end up with huge problems for their business that can seriously impact their ability to operate. 50% of all businesses close the door to their business before they’re in business five years, and out of all of those failed businesses, entrepreneurs will say that running out of cash was the reason why their business failed. Business owners can learn how to properly collect source deductions from their employees, and know how to submit payroll remittances to CRA in order to avoid running into huge problems that can impact their business financially, which may cause them to have to close the doors to their business.
The first thing that entrepreneurs should know when it comes to paying payroll remittances, is that they also have to make a contribution to CRA. Many business owners are under the misconception that they don’t have to pay CPP or EI since they are business owners. That unfortunately would be very wrong. Business owners are expected to pay from their own finances, CPP, and the amount that is equal to what their employees pay, and they also are expected to pay EI at 1.4 times the amount that there employees have to pay. These amounts, in addition to the employee CPP, EI and taxes, all must be added together and paid to CRA in order for businesses to avoid paying too little. If businesses pay not enough in payroll remittances, they could be hit with penalties says Edmonton Small Business Accountant.
Entrepreneurs should also be aware that there are penalties associated with missing paying remittances, or even just being late and submitting remittances. Even just by paying a single day late, business owners can be hit with a penalty of 20% interest per day. This is a huge penalty, is actually one of the most serious and steep penalties that CRA has out says Edmonton small business accountant. The reason for this is to act as a deterrent for business owners to avoid making late payments. By paying well before the 15th of the month, which is the deadline for most businesses to pay payroll remittances, this owners can avoid this steep penalty. Business owners may want to consider paying their remittances at the same time that they are calculating source deductions for their employees. By doing both at the same time, it can be very simple and fast for business owner to make that payment and avoid running into problems.
My understanding exactly how much they need to pay to the Canada revenue agency, and when they need to have that payment in, business owners can virtually eliminate all potential problems with submitting payroll remittances to CRA says Edmonton small business accountant. we hope to hear from you very soon.