Edmonton Small Business Accountant | How To Minimize Payroll Remittance Issues
There are no penalties more severe than the penalties associated with missing filing payroll remittances, or having a shortfall when it comes to payroll remittances says Edmonton small business accountant. Many business owners are aware that they must pay Canada revenue agency there payroll remittances, but they may not be aware that by making errors in this aspect of their business can create huge problems for them in the long run. Relearning what to avoid, business owners can create a plan to ensure that they always our current with their payroll remittances.
The first thing that business owners should know when it comes to payroll remittances, is the amount that they have to pay to the Canada revenue agency. Not only is there the employee CPP, the employee EI and the taxes that a business owner must withhold from an employee’s paycheck, but there is also employer contributions says Edmonton small business accountant. Business owners must also pay CPP which is equal to the amount that employees have to pay, and the employer also must pay EI which is actually 1.4 times the amount that employees pay. Employers must submit this amount on behalf of their business at the same time that they are submitting their payroll remittances to CRA. If they are not aware of the remittances that they themselves owe, they run the risk of shorting their payment. That can have huge consequences for their business.
Other than knowing how much they must pay, business owners should also be in the know of when they have to pay that. Edmonton small business accountant says most businesses have to pay their payroll remittances on the 15th day of every month. All the payrolls that were run in the month previous will have their due date be the 15th day of the month following payroll. However business owners should not wait until the due date in order to submit remittances. It is far easier and faster for business owners to create the payment at the same time that they are running payroll. They are already figuring out the source deductions that must be taken off of each employee’s check, all they have to do from there is at all the totals up, at their own contribution and they are ready to send that payment to CRA. If they wait for the due dates, they then have to go back and figure all of that amount out again, and then send it to. They risk for getting, or if anything goes wrong they could end up paying late.
The penalties are very stiff if business owners file the remittances even a single day late to says Edmonton small business accountant. One day late can result in a 20% interest charge. That’s after one day, and it’s added every day that the payment is late. That means that if a business owner owed $10,000, by the first day that they’ve missed, they will owe $12,000 instead. This is a huge financial cost, that is completely avoidable.
Avoiding payroll remittance issues can be simple and easy says Edmonton small business accountant. A business owner just needs to know what their requirements are, in order to come up with a plan with their accountant to avoid these issues. A business owner needs to know how much they need to pay, and they need to know when they must pay it. When business owners understand these two things, and they know what happens if they do not do these things, this can help business owners avoid huge problems in the future.
First thing that business owners should be aware of, is how seriously Canada revenue agency sees missing out on submitting payroll remittances. This is the most serious events that a business owner could make says Edmonton small business accountant. The penalties could be up to 20% of interest per day. Not only are these penalties fast and huge, Canada revenue agency is extremely aggressive and relentless in collecting that money. They view payroll remittances as trust funds, and if the business owner has not filed those, they view it as a misuse of those trust funds which is an extremely serious events. Not only could they be hit with huge penalties and aggressive collection calls, business owners also need to know that if they make errors on their remittances, that could trigger a payroll audit.
Since this is such a huge issue with CRA, business owners should be very aware of how much money they need to submit to CRA for payroll remittances. Edmonton small business accountant says most employers know about the CPP, EI and taxes they must take off of their employees paychecks, but they may not be aware that they are also to pay contributions themselves. The amount is 3.37, as it just went up in 2019. What that covers, is the employer’s contribution to CPP, which is equal to the amount that employees pay and employers also must pay EI, which is even higher at 1.4 times the amount that employees pay. If business owners are not aware of their own contribution to payroll remittances, they run the risk of not paying enough. That shortfall could create problems for them if CRA ever discovers that they are paying too little, and if CRA has not discovered throughout the course of the year, Edmonton small business accountant says as soon as they file their T4s, CRA will immediately be able to see how much they should have paid compared to how much they did pay, and if there is a shortfall the business owner will be in trouble.
Business owners should also work hard to ensure that they don’t submit their remittances late. Even though all remittances are due on the 15th of every month, business owners don’t have to wait that long. By submitting their remittances on the same day they went payroll, business owners can eliminate the potential of filing late. if you want to minimize your own payroll remittances then you should give us a call today.