Time to issue your T4 and T5 slips and file WCB
If you need to file T4 and T5 slips make sure they are remitted by the end of February. If you don’t file your tax slips by the deadline you will incur late filing penalties. Make sure you properly claim your CRA remittances throughout the year and that your T4 Summary reconciles. If it doesn’t reconcile you may have made a remitting error throughout the year and the CRA will want you to fill out a reconciliation report. You may also trigger an audit so make sure you don’t make any mistakes on your T4 slips or T4 summary.
Annual WCB reports (Employer Payroll and Contract Labour Reports) are also due this time of year. The filing due dates for these reports vary so make sure you check the due date stated on the report you receive in the mail. Be sure to remove any excess payroll and covered subcontractors’ payments. These amounts are not assessable so you will be overpaying if you include them in the assessable payroll calculation.
If you need assistance we would be glad to prepare and file your T4 slips, T4 summary, T5 slips, T5 summary and WCB report. Call us at 778-298-2415 to book a free half hour consultation.
If you’re the type of person who is self-employed and wants to make sure your taxes are filed in advance of the June 15th deadline, now is the time to start bringing in your statements and receipts. Accounting offices get bogged down during tax season and individuals with April 30th deadlines typically take precedent. By gathering all your documents and bringing them in early for bookkeeping analysis, you greatly reduce the risk of being delayed during tax season. Even if you don’t have all your tax slips ready, performing your bookkeeping in advance and then following up with your tax slips in March will make your file much easier to process during busy season.
Click the link below to request a free 1/2 Hour tax consultation for your small business or incorporated bookkeeping needs. We’ll make sure to get back to you within 24hrs.
What should you do if you can’t pay your taxes?
If you find yourself in a position where you think you won’t be able to pay the taxes you owe on time, don’t hold off on filing. Purposely not filing your taxes on time is a common mistake many people with lack of cash flow make. While it’s true that not filing will likely buy you some time before CRA collections becomes involved, this decision is very costly in the long-run.
The misconception some late filers have about their situation is that the same charges are applicable when you pay your taxes late; regardless of whether you file your taxes on time or not. This assumption is incorrect. The CRA late filing penalty is applicable if you don’t file your taxes by the return due date. The CRA charges interest separately based on the unpaid account balance owing. For late filers interest is calculated on both the taxes and penalties assessed. If you file on time but owe you will only be assessed interest charges.
If you are in a situation where you deliberately held off filing for the above reason, email us through our contact form http://www.completeaccounting.ca/contact/ or call us today at 778-298-2415 to find out your best course of action. In some instances a taxpayer may be eligible for the Taxpayer Relief provisions for penalties and/or interest. Alternatively, the Voluntary Disclosure Program may be applicable. Both have the potential to avoid penalties.
The big question that I ask clients regarding compensation from their own companies relates to their Canada Pension Plan (CPP) contributions. CPP premiums are applicable to T4 management fees, but not to T5 dividends. As a result, owners of their own company can decide if they want to contribute into CPP.
Anyone with multiple T4 incomes with applicable CPP employee deductions and employer contributions would want to make certain they do not exceed the CPP maximum contribution levels. If they do, the company would be over contributing. While an individual receives a refund of their overpaid employee portion of CPP contributions, the employer’s portion of the over contribution is non-refundable. This is an unnecessary way to pay extra taxes.
Another import consideration is cash flow requirements. For new companies cash flow can be hard to find. Reducing management fees during the initial startup years can make a big difference for small businesses on a tight budget. Just make sure that you are contributing the minimum amount to CPP each year to obtain or maintain CPP Disability coverage. It’s a relatively inexpensive form of insurance and if you end up qualifying for the program there is a minimum monthly payment amount of $433.37/mo. plus an amount based on your total CPP contributions.
Built up retained earnings might also be a factor in determining management fees vs. dividends. Your accountant will be able to advise you on your specific situation.
Canada Revenue Agency (CRA) Audits
Dealing with the CRA is an intimidating process for most people. Auditors may use this intimidation to their advantage. When combined with the bureaucratic process this causes frequent incorrect conclusions. If you are not happy with your audit results it’s important to follow up with an appropriate response in a timely manner to avoid being statute barred.
If you have are in the midst of an ongoing audit or expect additional CRA scrutiny due to a change in your tax deduction claims, contact us for a free 1/2hr consult. We can make sure that you claim as much as possible and that the audit results are acceptable before closing off the file. If necessary we can also submit a formal Notice of Objection and reopen the file if we have reason to believe the results are incorrect.
The most common audit categories are as follows:
Eligible Dependant (first time claims)
Allowable Business Investment Losses (ABIL)
Scientific Research & Environmental Development (SR&ED) Claims
Owners of newly incorporate businesses to even medium sized companies normally have very different accounting and tax needs of large corporations. Where large corporations normally have internal bookkeepers and accountants to take care of ongoing filing requirements, small companies are normally run by one or a few individuals who take care of all levels of the organization. Administration, operations, finances, marketing, human resources, legal, and customer relations can make it overwhelming for business owners. Finding an accounting firm that has a right fit for your business can easily make a large difference in your profitability and can even be crucial to your overall success.
As the owner of Complete Accounting Solutions I personally take it upon myself to learn about each client’s business operations beyond just the numbers. During each free 1/2 hour consult I look for opportunities to increase a business’ success. Sometimes all it takes is a new perspective to point out the small but important details that are easily overlooked when you are trying to keep things under control. We also have a wide variety of professional contacts that can provide value added services that are critical to growing a thriving business.
In addition to looking for ways to grow your business we also assist with reducing the reporting requirements and obligations. Between payroll, GST/HST, corporate tax, and even WCB, we can help simply the incorporation process so that you can spend less time worrying about government reporting and more time actually generating business. Some of this simplification process can be accomplished just by requesting less frequent reporting periods. Doing so means we cut down on the required work on your file and in so free up your time and reduce your accounting fees.
Lastly, if you have not already incorporated but are considering the option, we can assess your situation and provide you with a cost vs. benefit analysis so you know whether incorporation is right for you. Making the decision to incorporate when it’s not necessary can be a costly mistake so make sure you get the right advice upfront.
If you would like to schedule an appointment for a free 1/2hr consult visit www.completeaccounting.ca/results/free-consultation