Edmonton Small Business Accountant | Paying Payroll Taxes
There are many reasons why business owners may run into problems from CRA says Edmonton small business accountant. However running into problems with CRA due to payroll tax problems shouldn’t be one of them. There’s only a few reasons why business owners would run into problems with payroll tax, and both of those reasons are avoidable with knowledge and proper planning.
One of the reasons why business owners may get into trouble CRA due to payroll taxes, is that they missed the payment, or filed late. Edmonton small business accountant says this can be very easily avoided, if business owners get into the habit of sending off their remittances to CRA at the same time that they are running their companies payroll. Doing these at the same time can be very simple, since business owner is already calculating the remittances, and writing checks. Even though the remittances aren’t technically do until the following month after the paycheck was issued, for business owners trying to remember which source deductions were paid and when, can be a lot to keep track of. It’s much simpler and easier to keep track of, business owners do them all at the same time. By utilizing this method, entrepreneurs can ensure that they don’t forget to file their remittances.
The other reason why business owners may get into trouble with the Canada revenue agency on payroll tax issues, is by not sending enough money. Employers need to know that in addition to the CPP, EI and taxes that they are calculating to come off of their employees checks, they also need to pay additional fees for employee your CPP and EI. Those two additional amounts are what the employer contributes and they don’t come off of the employees checks. That amount works out to just under 7.4% and had recently gone up in 2019. By understanding the entire amount that they must pay CRA, business owners can avoid the problem of pain to little and then being in arrears at the end of the year.
If the business owner is in arrears, as soon as they file there T4’s, CRA will see whether there is a shortfall. Within 30 to 90 days of receiving the T4, if the business owner has either missed payments, or has paid too little, business owners should expect being assessed with the shortfall says Edmonton business accountant. In addition to that, business owners will also be getting a penalty. That penalty can be up to 20%. It is in fact the most expensive penalty that CRA issues. This also may trigger a payroll audit for that company as well. This can be not only expensive, but can cause a business that is already struggling in their cash flow, to completely run out of money and have to close their doors. However, business owners need to understand that they are personally liable for those remittances, whether their business is around or not. Therefore it’s extremely important for business owners to understand as early on in their business is possible how much they must pay CRA and how to avoid late penalties.
One of the problems that accountancy businesses bring them says Edmonton small business accountant, is that entrepreneurs get behind on their payroll remittances and end up being assessed penalties. As Michael Gerber, the author of the E myth says “the fatal assumption is: if you understand the technical work of the business, you understand a business that does that technical work”. Just because the business owner is great at what their business does, doesn’t make them an expert in running a business. Entrepreneurs should learn very quickly how to avoid running into payroll problems with CRA. Not only because the penalties are steep and fast, but because CRA views payroll remittance problems is extremely serious and can impact business greatly.
Knowing how much to send CRA in payroll remittances is an extremely important first step says Edmonton small business accountant. Most business owners understand that there’s three deductions that will come out of their employees checks, three components being CPP, EI and taxes. However, business owners also should be aware that they also owe the CRA additional contributions from their own business. That’s in addition to the amount that a business takes from their employees. Those components are the employer CPP and EI. But either not being aware that they need to send that additional funds to CRA, or by not knowing how much to spend, can create problems for businesses. The amount employers need to pay for CPP and EI recently went up and 2019, and is sitting at 7.37%.
By filing the incorrect amount and under paying, or by filing late or missing a payment completely says Edmonton small business accountant, businesses are facing a penalty of up to 20% in addition to pay the amount that’s owing. This is the biggest penalty that CRA issues, and it is an immediate penalty that is to just after one day of filing the remittances late. The reason why the penalty is so swift and so big says Edmonton small business accountant, is because CRA views failing to pay source deductions as Miss using tax dollars. This is money that is essentially the government’s that the business owner has collected on the government’s behalf, that they haven’t then sent on. It’s extremely serious, and not only will CRA issue huge penalties, they will also be extremely determined and collecting that money. Even if the business closes, all the directors of the company will be personally liable for that amount that is owed. There is no way that a business owner will be able to get away from paying that money. Therefore it’s extremely important, that business owners send the and aren’t late in making that payment. Business owners can talk to their accountants to help them with effective tax planning to completely eliminate the problem of payroll tax arrears in their business. if you are in a business or you own your own business and need help figuring out payroll. call us.