Processing your payroll is crucial and tedious, and it is essential for maintaining your employee’s morale and confidence. Unfortunately, this can be one of the most challenging business functions of handling your startup or corporation, especially when you are new to the world of business.
If you are an entrepreneur who is having a hard time with payroll processing, then this guide is for you. Here are some tips you can follow to make your payroll procedures more accurate and efficient:
Remit on time
The Canada Revenue Agency (CRA) is responsible for administering tax laws, and they can penalize you at least ten percent of the total of the late remittance for the first occurrence when you fail to make your payroll remittances to them on time. In addition, you’ll be charged more interest on outstanding amounts you owe the longer you wait to remit. A second offence in a calendar year doubles your penalty to 20 percent.
To prevent yourself from running the risk of making expensive mistakes, it is best to outsource your payroll than try to get the job done on your own. Many payroll service providers such as Measured Growth CPA pride themselves on timely remittances, assuring clients that they can remit on time and avoid being penalized.
Don’t pay your employees like contractors
Outstanding payroll deductions, interest, and penalties are typically caused by paying your employees like they were contractors, so make sure to avoid doing that. This will also lead you to be liable for Canada Pension Plan (CPP) contributions and employment insurance (EI) premiums you owe to your employee if your company gets audited by the CRA.
Avoid any complications with your payroll by turning to our skilled accountants for entrepreneurs. We have the knowledge, skills, and experience to assist you in creating an efficient payroll system. Discuss your needs with us to better understand the difference between employees and contractors and make sure to check the nature of your relationship with your workers by closely reading the CRA’s information bulletin. Doing so can potentially save you from paying thousands of dollars in payments to CTA.
Consider EI and CPP contributions
Almost everyone who works in Canada ages 18 to 65 makes regular CPP contributions. Your employee can choose to stop making payments to CPP when they turn 65 by filling out form CPT30. As an employer, you should be responsible for asking your staff member to provide you with a copy of this form. This is one of the instances where you do not deduct CPP from your employee’s paycheque. On the other hand, you wouldn’t deduct EI on your own paycheque if you are not paying into a self-employed EI plan.
When you find it bothersome and challenging to consider EI and CPP contributions when processing your payroll, a good rule of thumb is to avoid assuming that your employees over 65 years old are CPP exempt. Ask them for a completed CPT30 form for confirmation. Furthermore, deduct EI for all employees unless they also own your business. Don’t hesitate to call our accountants for further assistance.
The procedures involved in preparing your payroll can be complex, but by following the tips mentioned above and working with skilled accountants, you are sure to have a hassle-free payroll processing experience. Trust only experienced accountants for accounting and tax services.
Let us help you grow your business in the Great Toronto Area by seeking our top accounting services in Toronto. Contact us to learn more about how you can work with us!