Only businesses with a well-managed payroll system can genuinely find success. Whether it is a small-scale business that’s just starting up or a middle-sized one that’s thriving despite the competition, every business owner must see the value of having a well-maintained payroll system to help them solve for anything else concerning the business. When a method to pay off the employees of the company (whether there’s only one or less than ten), it takes your mind off worrying whether you did it right or not.
There are four types of payroll systems that you can choose to adapt for your business. The choice of whether you go for this or that is a matter of personal preference. However, expert accountants usually base their decision depending on a variety of factors including the size of the business and the number of its employees. Now, which of these systems should be your choice?
Payroll System Managed Internally
When you have less than ten employees, it would be best to have the payroll system managed internally. With the limited number of employees, you can easily keep track of the payments made including the deductions as well as the amount of the other social security benefits. The goal is to keep discrepancies to a minimum to none at all. When the payroll is managed internally, you don’t have to worry much about now knowing if everyone has been paid. You may hire an accountant to do it for you privately as a resource.
Payroll System Managed Professionally
This is the system when the bookkeeper or a certified public accountant is hired to look after the company’s payroll system. Not only do these professionals help you manage the system but they also look after the financial status of the company. They can ensure that all transactions involved in the business including bank withdrawals and deposits are managed well. This system is perfect for medium-scale to big companies.
An External Payroll Agency Manages the · Payroll System
This is the type of system when the company does not have hold of its payroll system. Instead, it is entirely managed by an external payroll system. The payroll company handles all the responsibilities that come with it including salary deposits and other deductions for the month. One of the best things about this type of payroll system is that it is handled with complete objectivity with very little to no discrepancies at all.
This is perhaps the most popular form of payroll system wherein the complete payroll list is input in a software. You only need to manage it from a portal. It is convenient because there is no need to solve anything. You have to make sure that everything is in the software and it will take care of the solving for you.
If you wish to learn more about how each system works and how it can benefit you, it is best to talk with a qualified accountant. Their professional opinion will help you make the right choice.
As an entrepreneur, when you run a business, there are various aspects you need to look into. From keeping track of business functions to keeping your employees happy, it takes a lot to maintain the smooth running of your business. One factor which highly affects the happiness of your employees is how well you manage their payroll. Apart from maintaining a basic record of the salary given to your employees, there is a comprehensive system that each business needs to have in place for a well-managed payroll. To help you know more about it, here are some common types of payroll systems listed by experts of payroll services in Edmonton.
1) Internally Managed Payroll Systems
An internally managed payroll system is a method which is feasible for a company which has a less number of employees. With limited employees, it is easier to maintain and manage payroll records without major discrepancies. Managing your payroll is something you can do by yourself, or you can hire a resource specifically for this purpose. The base requirement is the knowledge of maintaining payroll records and awareness about the various laws and taxes applicable.
2) Professionally Managed Payroll Systems
When we talk about professionally managed payroll systems, that’s where the bookkeepers and the certified public accountants (CPA) walk in. If you feel you lack the expert proficiency in managing your company’s payroll, you can opt for outsourcing it to a bookkeeper or CPA. You could also hire an expert on a contractual basis from a reputed accounting firm. Do keep in mind though, that these professionals will only help you manage your payroll records and may not complete the process of making transactions, bank deposits and deductions.
3) Payroll Services Managed by Payroll System Agencies
Another way of maintaining the accuracy of your payroll system is to hire a payroll services agency. These agencies manage the complete payroll responsibilities of your company along with making salary deposits and deductions for every month. Such payroll service agencies often give assurance of total accuracy and ensure that late payments are avoided.
4) Software Managed Payroll Systems
Software managed payroll systems are not widely in use but are gaining popularity slowly. Many software and online portals are now available for you to manage your payroll without going through the tedious process of calculating anything. You simply need to put in the details and these digital platforms record and maintain them for you.
When it comes to managing your payroll efficiently, you have multiple options. If you have a base knowledge of payroll management, you can manage it on your own or with the help a software. However, having a professional providing payroll services in Edmonton with the expertise of the field to work on your payroll is always advisable as it decreases the chances of inconsistencies considerably.
The process of payroll can be defined as the distribution and calculation of salary, wages, and taxes for your employees. When you run a business, you are responsible for making timely salary payments to your employees. In Canada, the same is not possible without complying with the requirements of the Canada Revenue Agency (CRA). Also, by managing your payroll without the help of professional payroll services in Edmonton can cause you to make some mistake. The common payroll mistakes you may probably make include the following.
Misclassification of Employees
When you have a business and manage a payroll system, you are entitled to a payroll tax based on the number of employees you are paying wages or salaries. Often business owners make a mistake of classifying their employees as contractors instead of employees. Never make this mistake as the money paid to contractors is not taxable. This will eventually cost you more as you will have to pay the tax along with the penalty for misclassifying an employee as a contractor.
Forgetting Payroll Tax
One of the biggest mistakes is to completely forget about payroll taxes. When you have a payroll system in your business, you need to pay taxes for the same. Based on your federation, state and local taxes, there are different types of taxes which may apply to you. Make sure to find out which payroll taxes apply to your business and file them on time to avoid being penalized.
Not Planning Your Payroll Schedule
Every business has a different payroll schedule based on the owner’s convenience. You could be paying wages or salaries to your employees on a weekly, biweekly or monthly basis. This payroll schedule has a direct impact on your monetary operations, the profit earned and the cash flow. If you do not plan your payroll schedule and simply keep changing the duration in which you pay your employees, it will directly impact the capital you have at the end of the month. As a result, your budget planning for future investments in the business could be hindered.
Wrong Calculation of Overtime
With constant work and deadlines in business, overtimes are bound to happen. What you need to worry about as a business owner is to make sure you keep an eye on your employee’s overtime. According to The Fair Labor Standards Act (FLSA), it is mandatory for you to pay more for the overtime done by your employee. Making this overtime payment can be complex as you may have to follow the hourly wage laws of the state. To make it easy, find out beforehand how you plan to pay your employees for overtime.
Not Maintaining Payroll Records
Often experts emphasize the need to maintain proper record when running a business. Not just your accounting records, make sure to maintain your payroll records as well. The time of audit is when these records will be of great help. Remember for any company, maintaining at least three years of payroll records is a must.
Managing Payroll Alone
Having a business to run and simultaneously managing various aspects of a business can be too much for one person. With a lot to do alone, mistakes tend to happen. When dealing with the matters of your business accounting, finances, and payroll, you cannot afford such mistakes. Mistakes in your payroll could have a direct impact on your employees. To avoid this, make use of payroll services in Edmonton. Having a professional to work on your payroll system will reduce the chances of discrepancies.
When you have a well-planned payroll system, making timely salary payments to your employees becomes easy. So make sure to work on your payroll better with the help of the finest payroll services in Edmonton.
Hiring a professional payroll firm offers numerous benefits as they save your time, take care of all the payroll efforts, and provide payroll compliance with taxes as well. Hence, many small businesses and startups are turning to hire payroll firms that provide several payroll services Edmonton. If you are also planning to hire a firm to ease your entire process, here are a few things that you should look for when hiring.
Various Payroll Services They Provide
The first and foremost thing to look for is the services these firms provide. You should first decide what you expect from a payroll firm and start your search by finding the companies that provide those services. Ideally, a good firm should run payroll as per the schedule, remit payroll deductions, deduct payments for wages, calculate taxes, file all payroll tax forms, and send year-end tax forms to employees and contractors. You can also look for additional payroll services Edmonton that may differ from firm to firm.
Use of Technology
The knowledge of the local rules and regulations affecting payroll is important. But nowadays, many businesses look for payroll firms that use software to manage the payroll system. Today, most payroll firms make use of various platforms and software to complete the task faster and be more accurate. The firm you are considering should have a working knowledge and experience of standard platforms, like Excel and Office, and also be proficient with latest payroll software like QuickBooks or Sage.
Cost of Payroll Services Edmonton
For a small business or a startup, every penny matters a lot. Hence, you must find out how much do the payroll services Edmonton cost. Compare the pricing structures of each payroll firm and understand if they are worth it. Some firms may charge a monthly fee, whereas some payroll companies may bill based on each employee. Some companies may also charge you for generating tax forms. Ask yourself whether the cost is worth paying considering the services they provide and their way of functioning. If the cost fits your budget, you can hire the firm.
Kind of Customer Support
It is crucial for any good payroll firm to offer strong support when you have problems, doubts or questions. Find out if you will be able to get help when you need. See if the people on the other end of the phone, chat, or email is prompt and available to solve your problems and doubts. Make sure that the payroll firm you select provides prompt and helpful customer support.
Outsourcing the payroll management operations to a professional firm is a great way to manage your payroll system and focus on your core operations. Just make sure you know what you are exactly expecting from an outside firm. Hire a payroll firm that matches your expectations and provide all the latest payroll services Edmonton to make sure your taxes are filed on time and help you save time for your other business responsibilities.
If you have a payroll account, then you should be aware of the payroll deductions. As an employer, you need to have the payroll remittance schedule prepared. The Canada Pension Plan (CPP), the Employment Insurance (EI) premiums and the income tax deducted from your employees’ salary should be remitted together with your CPP contributions and EI premiums. Let’s take a look at remitting payroll deductions in detail.
The remittances are deemed to be made on the day when it is received by the Receiver General. Therefore, as an employer it is critical to choose the right method of remittance that is suitable for you as per your due date. Your remittance form and deductions should be sent to the Canada Revenue Agency (CRA) on or before the remittance due date.
Steps to Running Your Payroll Account
You need to follow the six steps to run your payroll account. They are:
In case your remittance due date falls on a Saturday, Sunday or any public holiday recognized by the CRA, then you need to remit on the following working day. For new small businesses, you need to remit on a quarterly basis. To know more about the new remitter, get in touch with a professional accounting firm to help you in this matter.
For a regular or new remitter, you need to remit your deductions on or before the 15th day of the month after the month you have made the remittance. For a quarterly remitter, you need to remit your deductions on or before the 15th day of the month immediately following the end of the quarter. The quarters begin from January to March and vice-versa. There’s another form of remitter known as accelerated remitter for which the due date depends on a number of other factors.
All the information relating to your payroll accounts should be kept either at the place of your residence or at the place of your business. If you do not comply with the payroll remittance schedule, then you will have to face some hefty fines. As a small business organization, you would not want to face these penalties. To clear all your doubts relating to payroll deductions and complying with all the procedures of payroll account, it is recommended that you consult a specialist bookkeeping firm in Edmonton.
Are you able to manage your accounts effectively? Are you aware of all the latest tax policies and accounting standards? If the answer to both those questions is no, then no need to panic. You would rather want to focus on your core business activity than keep up with the latest updates on manage your business accounts. Rather, it would benefit you if you outsourced your bookkeeping to a bookkeeping service in Alberta. Apart from this, here are a few more benefits of outsourcing bookkeeping services.
1. Focus on Your Work
As mentioned above, one of the benefits of outsourcing bookkeeping services is that you can concentrate on your work. Sometimes, it’s not possible to be aware of latest changes in tax policies or accounting standards. Moreover, you may shift your focus from accounting work and concentrate on your main business activity. Thus, your productivity decreases. Hence, it is better to outsource your bookkeeping to a firm that deals in bookkeeping services in Alberta. Such bookkeeping experts have a clear understanding of the latest changes that are taking place in tax and accounts related matters.
2. Expert Advice
A firm dealing in bookkeeping services in Alberta will give you expert advice regarding your financial status. These firms are experts in professional accounting and therefore will guide you relating to different subjects in bookkeeping. Some of them include:
3. Reduces Scams
When you have your own accounts department, there is a possibility of manipulation in the financial transactions which can lead to scams. This is one of the common problems in small companies when they do not have a separate accounts department to manage bookkeeping. Outsourcing your bookkeeping will help you keep effective control of your various transactions. Thus, it prevents scams and fraudulent incidences and there is a proper management and accountability of funds.
4. Saves Money and Time
Want more reasons to outsource your bookkeeping? Saving time and money are other benefits of outsourcing bookkeeping services that you will get. It helps you to reduce cost. You do not need to hire a permanent accountant to take care of your bookkeeping. You can outsource your bookkeeping as and when required. Moreover, your bookkeeping requirements are taken care of by the professional, so you save time. This is essential, especially when it comes to filing your tax returns which consume most of your office time.
Apart from these reasons to outsource your bookkeeping, you get access to top accounting systems used by these outsourced bookkeeping firms. If you want to avail of all these benefits, then you may want to outsource your bookkeeping. Get in touch with professional bookkeeping services in Alberta to help you out.
A payroll system is an integral part of all organizations. This system is responsible for employees’ salary compensation, and also plays a vital role in protecting the company’s reputation by ensuring compliance with various legislations. Payroll affects every aspect of your business, from the goodwill of the company right down to the morale of its employees. If you have a small business, you too can set up a small business payroll system. When you set up a small business payroll system, it becomes easier to maintain as you grow in future. Here are steps to set up a payroll.
Registering with Canada Revenue Agency (CRA)
You must have a Business Number (BN) and a Payroll Program for your company by registering with CRA. A Business Number is a unique 9 digit number, used to identify a company for tax matters in Canada. In a Payroll Program, you need to gather some information and decide your first remittance due date. The following information is required for a payroll account.
The steps to set up a payroll account can be done online as well.
The next step is to collect the Social Insurance Number of your employee and file Personal Tax Credit Return. Once you’re done, you can go forward with calculating the deductions. CRA has an online calculator to estimate tax deductions. Ensure that you have the information regarding employee province in order to calculate proper deductions. Use the payroll deductions online calculator to determine your share to deduct from each pay period. For this, you must know the provincial and territorial location of the your employee.
Remitting Payroll Deductions on Time
You need to remit Canadian Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and Income Tax Deducted from your employee. In order to decide your remittance date and frequency do the following:
In case you need any help in the above points take services of a professional firm. You will have to pay high penalties if you are late in remitting your employees payroll deductions. The penalty is as follows.
Follow the above steps to set up a payroll system. Setting a payroll is a complex and time consuming task but it is beneficial to both the organization and the employees. So, if you need assistance to set up a small business payroll system, consult a specialized bookkeeping firm.
CRA has the right to pursue directors and former directors personally for certain categories of corporate tax debts arising during the time they were directors. The most common are GST/HST and payroll source deductions. This article focusses on certain tax liabilities of a company imposed under the Income Tax Act (the “ITA”) and the Excise Tax Act (the “ETA”) for which directors of the company can be held personally liable. The Canada Revenue Agency (CRA) can make the director liable in the following cases:
1. Directors liability for payroll deductions
Under the Income Tax Act, (“ITA”) a company is required to withhold/deduct and remit amounts to the Canada Revenue Agency for salary, wages, benefits and payments out of various plans (“Payroll Deductions”).If the company fails to withhold or deduct from remuneration (paid to a resident of Canada) an amount that is required to be withheld, the directors can be held personally liable for a penalty of 10 or 20 percent of the amount that ought to have been withheld and deducted plus any related interest.If the company fails to remit an amount to the CRA that was withheld and deducted by the company as Payroll Deductions the directors can be held personally liable for the whole of the unremitted amount, plus any related penalties and interest.
2. Directors liability for tax obligations on payments to non-residents
A company is required to withhold and remit certain amounts from payments made to non-residents of Canada. If a company fails to withhold or remit the required amount from a payment to a non-resident the directors of the company can be held personally liable for the whole of the amount plus any related penalties and interest.
3. Directors Liability for GST/HST Obligations
A company is required to collect and remit GST/HST under the ETA on taxable supplies made by the company. If a company fails to collect and remit the required amount of GST/HST, the directors of the company can be held personally liable for the whole of the amount that ought to have been remitted plus any related penalties and interest.
4. Liability extends to de-facto directors
A person who is not technically a director of a company can be held personally liable as a director in certain circumstances. A person who is, in fact, exercising the responsibilities of a director can be held to be a de facto director. A person who plays a key role in a company or has ultimate decision-making authority for the company will be at risk of being found a de facto director. The determination of whether a person is a de facto director is fact specific and requires analysis on a case by case basis.
It is the responsibility of every director to comply with his tax obligations to avoid being hauled by the CRA. ATS Accounting, with its expertise in tax preparation, bookkeeping and business accounting, provides services to safeguard the interests of individuals and small businesses in Edmonton and other cities in Alberta that aren’t equipped to put a full-time accountant on their payroll.