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Payroll remittance is one of the essential aspects of a business. So to make your run smoothly, you have to manage your payroll system.
However, It isn’t an easy task to deal with. It’s a tedious process that involves some complexities. So due to its complex nature, business owners might commit some errors in the remittance process.
Common payroll remittance mistakes include late payments and skipping steps, made by business managers. And such mistakes don’t go unnoticed. They make sure companies face some consequences in the form of penalties and waste of valuable time. Thus, while managing it, leave no room for errors.
In this article, we’ll guide you on how to remit payroll deductions without making errors.
It is a process of sending money to the Canadian Revenue Agency (CRA). It is the amount of money you pay to the CRA on behalf of your employee after paying salary or commission. So it is the amount you deduct from the salary or wages of an employee and remit to the CRA.
In Canada, employers take money from employees’ pay and send it, along with their own CPP contributions, to the government.
It can be a tricky process as it involves complex calculations. So it is important to pay extra attention to make sure that the calculations are accurate.
Get current tax rates, contribution percentages, and deductions to send to the CRA. The right amount of deductions reduces the chances of any calculation mistakes.
If you wish to make the process error-free, use dedicated payroll software. Such software won’t make mistakes in calculation. However, make sure you have entered the correct numbers.
Your payroll obligations including salaries, CPP contributions, and EI premiums make you responsible for paying to CRA.
The payroll remittance process can become much easier if you start maintaining organised records of employees’ payroll and remittances. Reliable software can do this job for you. Make sure to keep track of gross salaries, deductions, net pay, and remittance payments.
Before you choose a remittance schedule, it is essential to know your remitter type and remitter frequency. This information will help you know your due dates and remit your payroll deductions on time. As a result, it can help you avoid penalties and fines. You can visit CRA’s My Service to find out your remitter type and remitter frequency.
To prevent confusion among different funds, set up a separate account for this. A separate bank account will reduce the chances of risk. Also, it will help you ready the amount when it’s time to remit to the CRA.
You will also need the correct information and data to make an accurate payroll remittance. Here are some of the essential information you don’t want to miss.
Source deductions are the money taken from employees’ paychecks for taxes and benefits they receive from the company. We send the deducted amount to the CRA on behalf of employees.
The source deductions you can deduct include.
Income Tax:
It is one of the common types of source deductions. You can use CRA’s online payroll deductions calculator to know the income tax amount of your employee.
Canadian Pension Plan:
The Canadian pension plan(CPP) is another type of source deduction. Employees aged 18-69 with a qualifying job must contribute to the Canadian pension plan, unless they have a disability. You can find more information on contribution rates, exemptions, and other useful information on CRA’s CPP official website.
Employment Insurance Premiums:
Insurance premiums also fall under the source deduction. Each dollar your workers earn has a bit of money taken from it to pay for their insurance.
It is essential to manage an effective payroll remittance. It can help you avoid heavy fines from CRA. Also, it can ensure a smooth cash flow for both your business and employees. To ensure smooth payroll remittance, do accurate calculations, keep organized records, and set up a separate account.
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