Ensuring deduction as per the regulations is very important in Canada and every single entrepreneur needs to take the matter very seriously. Canada Revenue Agency (CRA) takes the compliance issues seriously. Any hints of misclassification or non-compliance will bring legal complication for any business.
There are instances when unintended mistakes can happen also while making the deductions. One needs to know the nuances to avoid any mistake from happening. We will discuss the basics of deductions so that any new entrepreneur can remain aware of the issues and can avoid mistakes.
Know What to Deduct
As an employer, you will have to know about all deduction heads. Then you have to ensure the deductions are being done as per the law. After opening a payroll account for a new employee, the process only starts. You have got to collect all information about the employee for ensuring the compliance. The list of the heads of deductions can be challenging to keep track but this is the way to ensure compliance. Deduction list includes CPP contributions, EI premiums, and income tax from paychecks. After deduction is done, you have to make sure the sum of money is deposited to the right place. No mistake or error will be condoned if you fail to deposit the sum accordingly. The rates of deductions are very important factors and you have to make sure you are conforming to the regulations. Once filling out the tax forms are completed, here comes the reporting part. You have to report the income and deductions of the respective employee in the appropriate T4 and T4A slip.
Yes, it may appear a daunting task to keep track all the ever changing regulations and remaining compliant while processing the payroll of your employees properly. However, making errors in deductions and remitting the money is not an option. For a small business, one can not take the risk of making errors in payroll processing and thereby incur fines. And then comes the trust factor. No one wants to confuse one’s employees by making mistakes in the paycheque deductions. The fine is not the end of the story. Legal fees can complicate the issue further and take away the dream of business expansion.
CRA Payroll Calculator
Canadian Payroll Agency (CRA) Payroll Deductions Online Calculator is an effective resource for you to get an idea about the deductions to do. You will have the opportunity to calculate all details like federal decisions, provincial deductions by entering the data from your end. If you want to use the calculation in your payroll processing, you have to do it on your own as CRA does not take any liability in case of miscalculation due to wrong data entry. It is a good idea to use this calculator for getting an overview only.
Delegate the Task; Outsource Your Payroll
Outsourcing your payroll to a trusted payroll provider will make your life easier. Miscalculation, wrong deduction etc will not bother you anymore as the expert at the payroll provider will take care of the details. In the case of any unwanted miscalculation, the provider will bear the responsibility. Once you outsource the payroll, it will bring you free time and resource to focus on the core business activities.
Besides error free calculations and deductions, a good payroll processing company will make sure all the processing are done on time and your employees are paid in time. They will also make sure, everything is being done to comply with the federal and provincial laws. A good payroll provider always remains updated with the laws and you will not be needing to worry about any change in the laws.
Tips for Finding the Right Payroll Provider
There are various benefits for outsourcing your payroll to a reputed and qualified payroll provider. You can have more time and resource for focusing on your core business operation once you have a payroll provider. However, you have to select the right payroll provider for your business. Once on board, a payroll provider virtually works as the extension of your core team. So, you have to be cautious before hiring your payroll provider. Here are some basic tips for you to find the best payroll provider for your business:
- Preliminary Research: Before shortlisting few firms, you should do bit of research. You can google who are offering what. You can also talk to your fellow businesses for an opinion. Other businesses can tell you who are most customer friendly and offer customized solutions. You should not focus on price and big names only rather you have to look for the best solution for your business.
- Detailed Research: Once you get your primary research done, you can shortlist few and then do deep research. You can visit the websites of the firms and talk to their customers. If online reviews are available then you can go though. In case online reviews are not available, look for the some existing customers for feedback on the services. It is not a good idea to rely on one feedback from online or offline. Remember, you are virtually hiring your own businesses extension and that requires bit of careful research and analyses.
- Focus on the Requirements: Before you finalize your payroll provider, you need to know what you need. Then only you can select the right and best provider. If your business needs customized solution, big payroll providers may not be the right solution for you. Once you are confident what you need and your research about the options are done, you can expect to select the right payroll provider. You can now provide a list of deliverables and ask for quotations from the short listed payroll providers. By the way, never forget to include your probable needs in future while you prepare the deliverables.
- Negotiation Time: Now it is time for negotiation with the representatives of the payroll providers. You should meet them in-person, if possible. Ask them to demonstrate their expertise and experience. Try to understand how far they will go to ensure you are getting the service you need. This is the time when you have to settle the service benchmark that has to be non-negotiable. When they will share you their experiences with other clients, make sure you follow up with the references. Once you are confident about the ability, you can move on to settle the financials and finalize the deal.
- Back to Business: Once you have signed the agreement, it is time to get back to business. Yes you can concentrate on your core business operation. Now it is time to realize your dream expansion of your venture. Your payroll is in the hands of experts and they will work on behalf of you as an extension of your business.
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