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Business Audits: How to Stay on the CRA's Good Side

Posted by Stacey Duggan

|

Feb 27, 2015 9:00:00 AM

Business_Audits-_How_to_Stay_on_the_CRAs_Good_SideBusiness audits are no fun. They can create intense feelings of stress and uneasiness. Your business could be audited as part of standard procedure or because of an unusual or suspicious tax return. Either way, if you’re receiving a business audit, you’ll want to do anything you can to keep the CRA on your good side and make the process as smooth as possible both for yourself and for the auditors. Here are a few tips you can take advantage of if you’re left in this sticky situation.

Keep Detailed Records

Business audits will look at your receipts and records. Whatever income and expenses you have declared and claimed on your income taxes should be recorded. You must keep all of your records for six years after submitting a tax return. The CRA auditors will want to be able to look up any individual transaction and see that you can verify them. The more detailed your records are, the easier this process is going to be.

All of your expenses should be documented with accompanying receipts, with a reference explaining how they were paid, such as with a note saying they were paid with cash or with a cheque number used to pay them. If your records are inconsistent or if anything you’ve reported doesn’t match your records, the auditors will have to proceed with a more in-depth investigation. If all of your records are in order, then the audit will be complete and you’ll be able to get back to your regular business routine.

What Will Be Checked?

In order to know which records to have on hand, you’ll need to know what the CRA will be looking for. To keep on the CRA’s good side, you’ll need to provide all original documentation, no photocopies. This can include receipts for business purchases, invoices, any cancelled cheques, and all of your bank statements. They’ll also look at your tax calculations and your bookkeeping and accounting programs.

If Your Records Are Incomplete

During business audits, bookkeeping irregularities and errors or incomplete records are your responsibility. The auditors will not do your bookkeeping for you to help you become compliant. The auditors will ask you to make any of the necessary corrections, recalculate your taxes correctly, or obtain the required receipts or other proof needed, which may mean you’ll have to make some trips to the bank or to your suppliers. The more incomplete your records are, the longer the audit will take, which won’t make the CRA happy.

Work with the CRA

Having a good attitude and being helpful during business audits can help you out along the way. The CRA auditors are just doing their job. If they believe your expenses aren’t deductible or they don’t believe you’ve demonstrated valid reasons for your claims, it’s best to work with them, rather than argue with them.

Results

The audit can end in a few ways. The auditors might see that all of your records are in order and the process is completed without any issues that need to be resolved. Or, if discrepancies are noted, you’ll have to fix them. You may have misunderstood a tax regulation or made an honest mistake that must be rectified. There might be a credit or balance due. You’ll be notified by mail in at least thirty days and you’ll have to respond and either question or accept the finding of the audit.

Business audits don’t have to be so bad. If you have your documentation in order and work with the auditors throughout the process, it can be done in no time.

 

Canadian Payroll Tax Deduction Calculator

Topics: CRA Audit, CRA, business audits

Tax Considerations for U.S. Companies Doing Business in Canada

Posted by Stacey Duggan

|

Apr 18, 2014 9:05:00 AM

tax considerations for us companies doing business in canadaOne of the principle difficulties in operating a business is dealing with tax considerations. If you're a US-based business operating in Canada, those tax considerations are doubled. You have the tax codes of two countries to deal with, along with multiple provinces, as well as treaties that can affect tax considerations. Trying to sort it all out, and keep it sorted, can consume an inordinate amount of time and energy.

Federal Income Tax

Typically, a US business will owe taxes to the Canada Revenue Agency if they are deemed to be "carrying on business in Canada." The definition of "carrying on business" is not always clear, and can be affected by numerous factors like gross sales, number of days conducting business, office locations, and employees. If you are deemed to be carrying on business in Canada, you will be regarded as a permanent establishment (PE) for tax purposes.

If you are deemed to be a PE, you will owe withholdings on your gross sales, employee withholdings, Canada Pension Plan, Employment Insurance, and Workers Compensation contributions. You will also be required to make regular filings, and may be required to pay a security against future withholdings.

Employee Withholdings

Determining when, and how much, to withhold from employees' paychecks is one of the more cumbersome tax considerations. If you're business is deemed to be a PE, you will be responsible for collecting taxes from resident and non-resident employees. The amount of taxes withheld from each paycheck, as well as yearly maximum withholdings, vary from year to year, and province to province.

Any mistakes made concerning withholdings will largely rest on you. If you withhold too much, you will be responsible for reimbursing the employees, and filing for a refund from the CRA. If you withhold too little, you are responsible for making up the difference. You can then attempt to collect the missed withholdings from the employees' future paychecks. If they are no longer with you, or if it has been longer than a year, you're pretty much stuck with the bill.

Social Safety Net

Canada has a variety of programs designed to ensure the long-term health and safety of employees. The Canada Pension Plan (CPP), Employment Insurance (EI), and Worker's Compensation (WCB) programs are all designed to provide employees with monetary support when they aren't working. The funding for these programs comes from a combination of employee and employer contributions.

As an employer, it's your responsibility to determine whether you need to be making these contributions, and how much you need to be paying. The amounts differ from year to year and, to make things more complicated, Quebec operates under a different system. There is a yearly maximum for withholdings and premiums, and it's up to you to monitor the contributions you've made yourself, and on behalf of your employees.

The Tip of the Iceberg

These are some of the simplest, most basic tax considerations for a US-based business operating in Canada. Even these tax requirements have varying degrees of difficulty and evolving applications. Digging deeper into the tax code reveals a cumbersome, convoluted tax code that can only be understood by experienced professionals.

The payroll professionals at The Payroll Edge have years of experience in navigating Canadian tax laws for US businesses. They provide a wide range of services that help US companies hire workers in Canada without having to try to learn an entirely new tax code. With their help, you can ensure that your US company is in full compliance with all applicable Canadian tax, labor, and payroll regulations.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: CRA, U.S. Business operating in Canada, Tax Considerations

How Canadian Payroll Keeps US Companies from Operating in Canada

Posted by Stacey Duggan

|

Feb 11, 2014 9:00:00 AM

How Canadian Payroll Keeps US Companies from Operating in CanadaManaging Canadian payroll is no easy task. For US-based businesses, there are numerous administrative hurdles that must be overcome before paying Canadian employees. Overcoming those hurdles is a time-consuming and expensive process. Once the hurdles have been cleared, there are ongoing concerns about the complexity of the payroll laws, as well as the frequent changes to those laws. The headaches associated with Canadian payroll have kept many US-based businesses from expanding into Canadian markets. For some businesses, the immediate and ongoing costs, as well as the risk of making mistakes, are simply too much to bear. Those companies choose to forego a Canadian expansion, rather than deal with the complexities of Canadian payroll law. Fortunately, there is an easy, affordable way to deal with Canadian payroll, while also minimizing the potential risks.

Jumping Through Hoops Yourself

Paying Canadian employees isn’t as simple as doing a quick currency conversion and sending out checks. Before you ever get to the point of paying employees, there’s a laundry list of administrative hoops to jump through. To legally establish a Canadian payroll department, you have to have a physical presence in Canada. This means establishing an actual, working office. You can’t get by with a postal box or an empty storefront. This cost alone has caused uncounted businesses to abandon their expansion plans.

Once you’ve established a physical presence, you’ll be faced with a few more hoops. You’ll need to set up all of your government accounts—the difficulty of setting up these accounts will vary greatly, depending on your type of business and what provinces you’ll be operating in. After that, you’ll need to set up bank accounts, purchase insurance, and schedule any workplace safety inspections. Once all of that is done, and you’ve gotten the green light from all of the different agencies involved, you can start hiring employees.

Hiring employees isn’t the final step in the Canadian payroll process. Once hired, they must be properly classified, trained, and provided all legally required materials regarding workplace health and safety. After they begin work, you’ll be responsible for keeping up with any changes to the laws, as well as any changes to worker classifications or job sites. Those laws can change with little notice, and are often subject to differing interpretations. Mistakes along the way will cost you time and money. Make mistakes after you’ve hired employees, and you could be facing audits, fines, and criminal penalties.

Letting Someone Else Jump Through Hoops

You could spend a lot of time and money trying to set up your own Canadian payroll department. Or, you could spend no time and less money hiring a Canadian Employer of Record (EOR). An EOR performs the same functions as a Professional Employer Organization (PEO) in the States. You pay the EOR directly, and they manage all aspects of your payroll. From hiring and training, to workplace safety and tax remittances, everything is handled for you. Since they’ve already set up the necessary accounts and infrastructure, they can start conducting your business in Canada almost immediately. And, since they service a variety of clients, the costs of jumping through the hoops are distributed across those clients – no single business has to foot the entire bill themselves.

An EOR like The Payroll Edge saves time, money, and risk. With their professional services, it’s unlikely that any mistakes will be made when dealing with Canadian payroll. They have the training and experience to keep up with the current complex payroll laws, and to deal with any future changes to those laws. With their help, you don’t have to worry about Canadian payroll problems keeping you from operating in Canada.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Payroll Processing, Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Canadian Payroll Regulations, EOR, Canadian Payroll Service, U.S. Companies operating in Canada, CRA

US Companies Get in Trouble Hiring Canadian Independent Contractors

Posted by Ray Gonder

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Feb 5, 2014 9:00:00 AM

US Companies Get in Trouble Hiring Canadian Independent Contractors2Given the complexities of operating a US-based business in Canada, it’s no surprise that some employers look for loopholes and workarounds. One workaround that US businesses have tried is to hire Canadians as independent contractors instead of employees. The US Company may feel that this removes the need for them to have a business presence north of the border as they merely have to direct funds from their bank account to the independent contractors.  

Unfortunately, this approach can cause numerous legal and business issues.

An Employee by any other Name

If you need an independent contractor in Canada, that’s perfectly acceptable and completely legal. If you need an employee in Canada, and use an independent contractor to avoid tax withholdings and other employment regulations, then you’ve broken the law. Just like the IRS, the Canadian Revenue Agency (CRA) has strict rules around qualifying someone as an independent contractor.  The CRA has expressed a direct interest in eliminating the underground economies that have been created by employers abusing the independent contractor system. They are actively looking for businesses that abuse the system, and the penalties are severe.

Loss of Control

Unsurprisingly, an independent contractor is expected to be independent. They set their own hours, provide their own tools, and can subcontract their work to other people. By law, you have very little say in how they conduct their business. As a manager or owner, this gives you very little control over someone who is working for you. If they’re being used legitimately as a contractor, that’s rarely a problem. However, if you’re using them as a de-facto employee, then you have issues. Training them on your business processes, giving them goals to achieve and the tools to accomplish them and having the expectation that they are only working for you, all cross the line between contractor and employee.

Why Bother?

The only reason to use independent contractors as a workaround is convenience. Setting up all of the accounts and infrastructure to pay workers legitimately is difficult and time consuming. Instead of dealing with all of the legal and administrative complexities, some employers choose to pay contractors directly, expecting them to handle all of the legal and tax requirements themselves. While this may be simpler, it’s illegal and can result in huge fines, back payments, criminal penalties, and the loss of your right to conduct business in Canada. To make matters worse, it’s all pointless, since there’s a way that’s just as easy, yet completely legal.

Employers of Record

If you want the convenience of paying a flat rate, without having to worry about tax withholdings, workplace regulations, or business infrastructure, then you want an Employer of Record (EOR). They operate in the same way as an American Professional Employer Organization (PEO). An EOR already has all of the infrastructure, accounts, and insurance necessary to directly hire Canadian employees. You pay the EOR directly, then they hire and pay employees, handle withholdings and remittances, and ensure workplace compliance. You get the convenience of a contractor, without the legal risk, and without ceding control.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, EOR, Employer of Record, U.S. Companies operating in Canada, CRA, Canadian Employer of Record, Independent Contractor, CRA Compliant

Why a Canadian Payroll Calculator Can Be Your Best Friend

Posted by Stacey Duggan

|

Jan 28, 2014 10:25:00 AM

describe the imageWhen trying to navigate the complexities of Canadian payroll laws, it’s good to have a friend on your side. A Canadian payroll calculator can be that friend. For US-based businesses, Canadian laws can be especially cumbersome and difficult to overcome. Like a good friend, a Canadian payroll calculator can offer advice, guidance, and encouragement. That advice and guidance can keep you from making costly mistakes, while encouragement can keep you going even when complying with the laws seems impossible. There are a lot of tools you can use to ease your Canadian expansion, a Canadian payroll calculator is one that will make it feel like you have a trusted friend in your corner.

Advice When You Need It

Sometimes, you just need to know if you’re on the right track. A Canadian payroll calculator can help you determine if your withholding calculations are near the mark. By entering some basic employee information, you can get an overview of the most typical tax situations in different provinces. While it can’t give you information on every possible scenario, a Canadian payroll calculator can give you a good starting point for the most common tax situations. Best of all, like a trusted friend, a payroll calculator is available whenever you need it. You don’t have to wait for business hours, or make an appointment—just open the calculator and start getting help.

An Ounce of Prevention

Like a good friend, a Canadian payroll calculator can help keep you from becoming your own worst enemy. If the advice it gives varies wildly from your own calculations, then you should double-check your numbers. It’s possible that you’re entering erroneous information, or misinterpreting some aspect of the law. If you ignore the advice and stick to your own numbers, you may be opening yourself up for future legal consequences. While the calculator won’t be right in every instance, broad discrepancies should be thoroughly investigated. If you can’t decide between your numbers, and the numbers the calculator gives you, then it’s time to consult a professional.

In Over Your Head

A good friend will tell you when it’s time to talk to an expert. If a Canadian payroll calculator is consistently showing that your numbers are off, that’s an indication that it’s time to get professional help. There are a lot of complexities to Canadian payroll law, and it’s possible that you’re missing something important. The calculator has no way of knowing if it’s a worker classification problem, a job-site location issue, or a simple arithmetical error. All it can do is take the information you give it, and provide its best guess based on the most common regulations. For anything beyond that, you need to talk to a payroll professional.

In this Case, Good Friends are Easy to Find

Fortunately, it’s easy to find other trusted friends for your corner. A professional payroll service, like The Payroll Edge, can handle all of your Canadian payroll needs for you. They have a highly-trained, highly-experienced staff of payroll professionals. With their help, you’ll speed up your payroll process, while also minimizing the chances of an audit or penalties. Using a professional payroll service takes all of the guesswork out of handling your payroll, while also freeing up your staff to handle other tasks. While a Canadian payroll calculator can help you do it yourself, a payroll service provider can do it for you.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Service Provider, Canadian Payroll, Canadian Payroll Service, Best Payroll Calculator, Payroll Calculator, CRA, Canadian Payroll Calculator, Payroll Tax Laws in Canada, Full Service Payroll Provider

What’s The Best Canadian Payroll Calculator?

Posted by Stacey Duggan

|

Jan 17, 2014 1:40:00 PM

What’s The Best Canadian Payroll CalculatorLike a personal income tax calculator, a Canadian Payroll Calculator, like the one here can be a handy tool for determining if you’re on the right track with exemptions and withholdings. However, like a personal tax calculator, a Canadian Payroll Calculator is no substitute for the assistance of an experienced professional. If an online calculator could replicate professional experience, there would be no more need for CPAs, accountants, or tax attorneys. As things stand, calculators are limited by the knowledge and experience of the person using them. If you make an incorrect entry, or don’t fully understand how to apply the thousands of different rules and laws, then the output will be inaccurate. With personal taxes, this could result in an audit, fines, and back payments of thousands of dollars. When handling payroll for dozens or hundreds of employees, the costs could increase exponentially.

No Substitute for Experience

Let’s face it – payroll laws are complicated, no matter what side of the US-Canada border you’re on. If you happen to operate on both sides, then the complications are doubled. Payroll professionals spend years learning all of the intricacies of the law, and even that robust knowledge can’t prepare them for everything. When new laws are adopted, there’s no way for the authors to foresee every possible situation. When unique situations arise, applying the law correctly requires experience with previous, similar, situations. You can’t get that experience from just an online Canadian payroll calculator.

Payroll professionals handle every conceivable situation, week in, and week out. Every day is spent gaining more experience in the application of payroll regulations. While you or your payroll department may spend a few hours each week on payroll, payroll providers do it every single day. This level of experience allows them to quickly and accurately handle the most complex payroll needs.

Get Additional Value from A Payroll Provider

For US businesses operating in Canada, payroll regulations are just one of many day-to-day issues that must be dealt with. Maintaining a physical business presence, government accounts, insurance, and workplace compliance are a few more. Trying to manage the legal requirements of a business on both sides of the border can tax your resources and exhaust your staff. And, if you make any mistakes, the costs can quickly offset any profits you’ve enjoyed. No Canadian Payroll Calculator can tell you if you're handling your legal compliance correctly.

Payroll service providers in Canada also operate as Employers of Record (EOR). Performing the same functions as a Professional Employer Organization (PEO) in the US, an EOR makes it easy to manage your business from a distance. Instead of paying to set up your entire business organization north of the border, you pay the EOR, which already has all the business resources you need in place. Instead of spending your valuable time jumping through legal hoops and dealing with multiple layers of bureaucracy, you actually spend your time running your business. The EOR has the expertise and experience to handle all of the legal requirements, while you focus on the things that make your business successful.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Payroll Tax in Canada, Canadian Payroll Regulations, Employer of Record, Payroll Calculator, CRA, CRA Payroll Tax, Canadian Payroll Calculator

A Payroll Calculator that Calculates Canadian Payroll Deductions

Posted by Stacey Duggan

|

Dec 20, 2013 11:30:00 AM

A Payroll Calculator that Calculates Canadian Payroll DeductionsIf you’re a Canadian employer, you may be looking for a payroll calculator to help you determine the appropriate withholdings for your workers. To avoid the expense of fines and back payments, deductions must be accurately withheld and remitted to the proper government agencies. Using a payroll calculator is a quick, easy way for employers to calculate basic deductions. Of course, not all deductions will be basic, and no calculator can fully replace the expertise and guidance of an experienced payroll professional. And, like all payroll calculators, the results will only be as accurate as the data that you enter. Any mistakes, omissions, or regulatory misinterpretations entered by the user will create erroneous results. While a payroll calculator can be a useful tool, it cannot, nor is it intended to, serve as a standalone solution for determining the proper deductions for every employee in every situation.

More than Just the Math

Like all calculators, a Canadian payroll calculator takes the information you give it, does the math, and generates a result. Unfortunately, Canadian payroll regulations are about much more than some simple math. There are complexities and subtleties to the law that only the most experienced payroll professionals are equipped to deal with. A payroll calculator can’t tell you if you’ve properly classified your employees, or if new positions or jobsites have caused changes to their status. It also can’t tell you if you’ve applied the correct payroll regulations in every situation. The calculator assumes that you have entered all of the information correctly, and creates its results based on that information. If you don’t have a firm understanding of all of the applicable laws and regulations, then the results from the payroll calculator can be misleading.

Learning the Ropes

For businesses that try to manage their own payroll, there are quite a few obstacles that can’t be overcome with a calculator. Learning, understanding, and properly interpreting Canadian payroll regulations is just one of these obstacles. There are also government accounts to create and maintain, establishing banking and insurance accounts, and making sure that employees and workplaces adhere to health and safety regulations. Trying to manage everything by yourself can be time consuming and expensive. In the event that any mistakes are made along the way, the costs and time involved can increase exponentially. While a payroll calculator can help you with some very basic needs, you’ll still have a lot of work left before you can start hiring and paying employees.

A Tool, not a Solution

A payroll calculator, like the one found here can be a great addition to your toolbox. However, no calculator can replace the guidance of a qualified payroll professional. Only they can tell you if you’re understanding and interpreting all of the regulations correctly. And, while a calculator can only calculate, a payroll service provider can do so much more. They can manage and administer all of your payroll and personnel needs, freeing you and your staff to focus on your core business pursuits.

They can monitor employees and job sites to ensure continuing compliance with all federal and provincial regulations. And, when it comes time to pay your employees, they have all of the necessary personal, equipment, and training to calculate withholdings, make remittances, and issue paycheques. Use the calculator for the basic needs it was meant to address—for your more complex payroll issues, you need to trust the professionals at a qualified payroll service provider.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Tax, Payroll Service Provider, Outsourced Payroll Service, Payroll Tax Calculations, Payroll Tax in Canada, Canadian Payroll Regulations, CRA, CRA Payroll Tax, Payroll Regulations

Is Your Canadian Small Business Adhering to Government Payroll Standards?

Posted by Karen McMullen

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Nov 22, 2013 9:00:00 AM

Is Your Canadian Small Business Adhering to Government Payroll StandardsOne of the most important, and challenging, aspects of running a small business is maintaining compliance with payroll regulations. Federal and provincial payroll regulations are incredibly complex, and affect everything from reporting requirements to how pay statements are structured. Understanding and applying all of these payroll regulations correctly is time consuming, and there is no room for error. Simple mistakes can lead to financial and legal problems that can cost your business a fortune. Maintaining compliance isn’t easy, and requires an investment of time, effort, and money.

Reporting and Remittance

Payroll regulations governing employee withholdings and employer contributions can differ depending on the type of business you operate and the employees you hire. Dates for remittances also vary, depending on your previous average monthly withholding amounts (AMWA). As your business grows or shrinks, the reporting dates and requirements can change significantly. If you’re handling payroll yourself, keeping up with all of these changes is your responsibility. Late or incorrect remittances can lead to audits, fines, and back payments.

Piles of Paperwork

Accurate documentation is often your only defence in an audit. The CRA recommends that you keep payroll records for 36 months, though they are not limited to a 36-month period for audits. To be on the safe side, you need to make sure that all of your timekeeping and reporting records are up to the latest standards. All of your documentation that contains employee information must be stored in a secure location, for your protection and the employees’. Upon request, any and all documentation must be turned over to the CRA or other authorities for examination.

Employee Classifications

Payroll regulations can also vary widely, depending on the types of services you’re paying for. Like many businesses, you may employ non-citizens, visiting workers, interns, and independent contractors. Each class has different reporting requirements, making it necessary to set up different pay schemes for different employees. You also have to be aware of payroll regulations that can affect an employee’s classification. Failing to adhere to the regulations could turn an independent contractor into a full-time employee—leaving you on the hook for past remittances and payments. Each classification has its own rules and regulations, adding another layer of difficulty to handling payroll.

Always Learning

Perhaps the most difficult aspect of payroll regulations is their constant evolution. These rules change from year to year, if not more frequently. The application of these rules can change from one government agency to the next. Having an understanding of these regulations one day is no guarantee of the same understanding the next day. The only way to assure constant compliance is through constant training and practice. Whoever is handling your payroll must be able to attend training seminars and conferences, read legal texts, meet with government officials, and practice all the things they’ve learned. Even small gaps in their knowledge or experience can prove costly.

Hassle-Free Compliance

An outsourced payroll provider offers an easy way to avoid these problems. They make it their business to stay up to date on changing regulations, and to incorporate those changes into their regular routine. Employees at a payroll service receive constant training, as well as constant experience in applying that training. They frequently interact with auditors and agents, so they know how the laws are actually being applied, versus how they’re written on paper. All of this knowledge and experience helps them avoid compliance issues, and successfully defend businesses that are accused of compliance lapses. When you factor in the associated costs of training, software, legal representation, and possible fines, payroll service providers are an affordable, reliable alternative.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Regulations, Employee Payroll Deductions, CRA, CRA Compliant, Small Businesses Payroll, Small Business Operations

Manage Your Payroll the Right Way with an Outsourced Service Provider

Posted by Ray Gonder

|

Nov 20, 2013 9:00:00 AM

describe the imagePayroll processing is an important part of any business. Making sure everyone is paid accurately, and on time, is critical. Making sure all of your reporting and remittance obligations are met is equally critical. Mistakes in any part of your payroll processing can lead to labour issues, audits, and expensive legal entanglements. There are several ways to handle your payroll processing, some more difficult than others. Handling your payroll the right way will save you time, effort, and money. Handling it the wrong way can end up costing you way more than you bargained in the long run.

DIY Payroll Processing

You always have to option of just doing it all yourself. Most businesses start out this way, with the owner handling payroll until it becomes too large to manage. You can take the time to learn all of the regulations, attend conferences to learn about new legislation, and even buy yourself some expensive software. Of course, then you have to learn to use the software, and keep up with updates and changes to the software. Once you have the knowledge and the software, you can spend hours every week handling all of the paperwork for payroll processing, as well as addressing any employee issues with payroll. As your business grows, you’ll spend more and more time on payroll, and less time focused on your business.

Pass it Along

Often, when payroll processing gets too complex for the owner, it gets handed down to the growing HR department. They inherit the responsibility of keeping up with changing legislation, learning new software, and dealing with employee issues. They often have little or no previous experience with payroll processing. They get to start from scratch, and learn the ins and outs of payroll service as they go. Of course, they aren’t liable for any mistakes they might make along the way. That burden still falls directly on the company. Incorrect payments or improper remittances can trigger a visit from the CRA. If they find problems with compliance, the fines and penalties go to the company, not to the HR staff.

Amateurs vs Experts

Payroll processing is a lot like other business services. It’s best to leave it in the hands of agencies that specialize in making sure it’s done right. Most businesses use accountants for taxes, shipping companies to deliver goods, and service agencies to repair equipment. Why do they outsource all of those needs? Because smart owners know that no business can do everything. Letting trained, experienced experts handle your tangential business needs just makes sense. When you try to do everything, you end up putting too much stress on your personnel, and pulling their focus away from your core business pursuits. By outsourcing some of your needs, you allow your staff to maintain laser-focus on growing and improving your business.

An outsourced payroll service relieves pressure on your staff, and relieves you of the stress of worrying about potential audits and penalties. They have years of experience interpreting and applying new and existing legislations, allowing them to easily navigate the complex payroll requirements. They undergo frequent, rigorous training, and have access to the latest and best software. Using their services is just like engaging a tax professional or repair service. If you want the best service, you hire someone who specializes in the service you need, and who has a proven track record of success.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing, Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Payroll Tax Calculations, Payroll Tax in Canada, Canadian Payroll Regulations, Canadian Payroll Service, Payroll Calculator, CRA, CRA Payroll Tax, CRA Compliant

Canadian Payroll Tax Calculations - What You Need to Know

Posted by Stacey Duggan

|

Nov 18, 2013 1:20:00 PM

Canadian Payroll Tax Calculations   What You Need to KnowIn an effort to save money, it can be tempting to try to handle as many tasks as possible in-house. Many businesses are asking their personnel to handle a growing list of responsibilities, regardless of their training or expertise. While some tasks afford a margin of error, and allow for time to learn the responsibilities, handling Canadian payroll tax responsibilities isn’t one of those tasks. If you’re considering handling Canadian payroll tax compliance in-house, there are a few things you should know beforehand.

It’s Not Easy

Canadian payroll tax laws are complex and difficult to learn, let alone master. To make matters worse, the application of those laws can change from one situation to the next, and may not be applied the same way by every agency. Learning which laws apply in which situation takes time and experience. During that time, any mistakes can cost the business dearly. The CRA, and other agencies, won’t accept ignorance or inexperience as an excuse for non-compliance. At best, mistakes will result in back payments, along with the associated costs of processing and distributing new cheques. At worst, fines and criminal penalties can be imposed for any errors in reporting or remittances.

It’s Not Constant

Learning Canadian payroll tax laws is a constant process. The laws, at all levels, change frequently. These changes can be in the form of new legislation, changes to existing legislation, or differences in application from year to year. Staying on top of these changes requires constant vigilance on the part of your personnel. They’ll have to attend seminars, training sessions, and read up on proposed and actual changes. This investment of time and effort will come directly out of their overall productivity. If they make any mistakes with the new legislation, any savings you enjoy by handling Canadian payroll tax in-house will quickly disappear.

It’s Not Without Risk

All of the time, effort, and money invested in training your personnel can vanish after a single CRA audit. Government agencies have stepped up their compliance checks, meaning more agents looking for more mistakes. The fines and penalties for first-time offenders have risen steadily in recent years, making any errors more costly. Even the best training, and intentions, aren’t a substitute for experience. While your personnel are trying to develop that experience, the CRA will be watching for any slip-ups.

There’s an Easier Way

Using your in-house personnel to handle Canadian payroll tax compliance may appear to save you money on upfront costs. You’re already paying your personnel, so why not add to their responsibilities? However, when you add in the cost of training, the lost productivity, and the potential fines and penalties, it becomes a losing proposition. There are ways to cut expenses that don’t put your business at greater risk of a government audit. Using an outsourced payroll provider saves you the expense of constant training, and keeps your personnel focused on tasks that directly benefit your business pursuits. A payroll provider also minimizes the risk of a government audit, saving you money on fines and legal representation during government actions. When you do the math, it just makes sense to let a payroll provider handle your Canadian payroll tax obligations.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Payroll Tax Calculations, CRA Audit, Canadian Payroll Regulations, Employee Payroll Deductions, Payroll Calculator, CRA, CRA Payroll Tax, Payroll Deductions

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