Need to know how much is in the bank? Check your own records (assuming they’re up to date), not your online bank balance. Your books will contain all issued cheques, whether they’ve been cashed yet or not.
Posts Tagged ‘Bookkeeping’
Check your own records for most up to date bank balance.
Tuesday, May 8th, 2012
Journals vs General Ledger
Tuesday, May 1st, 2012Journals capture accounting transactions day by day. The general ledger contains the same transactions, but organized account by account.
Document all transactions and keep good paper records as backups.
Wednesday, April 25th, 2012It’s important to document all transactions, to the extent that you can. Keep good paper records to back up your reports.
Journals classify accounting transactions by type of action.
Tuesday, April 17th, 2012Journals are used to classify accounting transactions by the type of action. So, for instance, revenues are processed through Sales/Receipts/Deposits journals, and expenses through Purchases/Payments/Payroll journals.
Itemize pay and deduction amounts for employees
Tuesday, March 27th, 2012Employers must provide detailed pay stubs itemizing pay and deduction amounts. Accounting software does this automatically with each pay. If you use manual cheques, every time net pay changes you should issue a report to each employee.
Payroll source deductions usually remitted on the 15th of the month
Friday, March 16th, 2012For most small and mid-sized organizations, payroll source deductions must be remitted to the Canada Revenue Agency on the 15th of the month, for the preceding month’s activity. (Larger organizations may need to remit more frequently.)
Employee and employer contributions to the CPP
Tuesday, March 13th, 2012Employees and employers contribute equally to the Canada Pension Plan. In 2011, the rate is 4.95% of earnings over $3,500. Self-employed individuals pay the entire amount – that is, 9.9% of earnings over $3,500.
I got a bonus, and I had to pay a huge chunk of it as tax. What happened?
Wednesday, February 22nd, 2012The bonus becomes part of your total compensation for the year. Let’s say your salary is $36,000 and your employer gives you a $500 bonus. You now need to be taxed as though you’re making $36,500. The bonus calculations need to adjust for the boost in your annual earnings.
Employment Insurance (EI) is a straight percentage of earnings up to an annual maximum. It’s not the culprit, here.
Canada Pension Plan (CPP) is a straight percentage of earnings over $3,500, to an annual maximum. The first $3,500 of earnings is not pensionable. This exempt amount is spread over all of the pays in the year. So, on a salary of $36,000, your weekly gross would be $36,000 ÷ 52 = $692.31. Your weekly non-pensionable earnings would be $3,500 ÷ 52 = $67.31. You pay CPP on only $692.31 – $67.31 = $625.00.
However, if you receive the $500 bonus on a separate cheque, you need to pay CPP on the whole bonus, because you’ve already had the exempt amount on your paycheque. That may make the CPP feel extra expensive.
Tax works in a similar way. In Canada, the first chunk of our income is tax-free: the basic personal exemption (for 2012, $10,822 federally). Thereafter, increasing tax rates apply to different slices of our income. Here are the rates for 2012.
The tax amount on your weekly paycheque is a blended rate: 0% on the first slice, 15% on the next slice, and so on. However, a lump sum such as a bonus must be taxed at the marginal rate: the tax rate that applies to the next dollar of earnings. This can feel very costly, but in fact it’s fair.
To work this out for yourself, you can use the CRA Payroll Deductions Online Calculator, or your can try the manual method, explained in more detail here.
Do I have to pay tax on a bonus?
Wednesday, February 22nd, 2012Emphatically, yes!
Bonuses are compensation and, as such, are taxable. Here’s a link to the Canada Revenue Agency’s Special Payments Chart. It lays out the requirements for source deductions on an array of payments, including bonuses.
T4 & T4A Deadline
Monday, February 6th, 2012It’s a leap year! Your deadline for filing 2011 T4 and T4A slips is Wednesday, February 29, 2012.
Annual T-Slip Deadline – February 29, 2012
Thursday, February 2nd, 2012Staff Post
By Heather Young
The annual payroll reporting deadline is looming. T4 and T4A slips must be filed by Wednesday, February 29, 2012.
T4 Slips
In preparation, you should reconcile your payroll accounts: make sure that the balance on your PD7A form (i.e. the total source deductions that the government acknowledges receiving) matches the total of the cheques you issued.
Conduct your own “pensionable and insurable earnings review.” The Canada Revenue Agency (CRA) checks this for every filer. Before you submit your T4s, you should confirm that the correct CPP and EI amounts were withheld, and were properly matched with employer contributions. If you find any shortage, it needs to be accrued to the employee record and remitted to the CRA.
Review your company’s employment relationships for any taxable benefits. Taxable benefits are items above and beyond payroll that have a value for employees, and that the CRA considers taxable income. Check this page on the CRA website for information about cell phones, parking, transit passes, insurance, gifts and other benefits.
Taxable benefits should be processed on a pay period by pay period basis, as required by law. If you’ve overlooked something, though, be sure to record it and remit the appropriate taxes at payroll year-end.
T4A Slips
Here’s the CRA’s word on when you need to issue T4A slips.
For small not-for-profits, including arts organizations, the most common requirement is to document “fees or other amounts for services.” This includes freelancer and self-employed contractor fees and, indeed, fees paid to any unincorporated business. (That is, cases where the fees are to be reported on a personal income tax return.)
Amounts paid to freelancers are to be reported on Box 48 of the T4A slip.
Here’s what the Canadian Payroll Association says about T4As: “The CRA is currently conducting a review of the types of payments that payers will be required to report in this box (i.e. Box 48). While this reporting requirement may be expanded in the future, it currently applies only to payers of independent or self-employed contractors, who should report any fees (excluding GST/HST) on the T4A using Box 48.”
Late filing
The penalties for late filing of T4 and T4A information returns can be found here on the CRA website.
Questions? Please contact us or comment below and we’ll do our best to help!
Taxable Benefits and Group Life Insurance Premiums
Wednesday, January 18th, 2012Do you offer a benefits package? If the employer pays for group life insurance premiums, there is a taxable benefit to the employee which must be reported as compensation on the T4 slip. For more information, see the CRA website.
53 Week and 27 Bi-Week Pay Years and CPP
Thursday, January 12th, 2012Every few years, employers who pay weekly will have a 53-pay year (instead of 52), and bi-weekly employers will have a 27-pay year (instead of 26). This affects CPP calculations.
Employers Decide Payroll Frequency
Thursday, January 5th, 2012Employers can decide on payroll frequency. Common pay periods are weekly, bi-weekly (26 in a year), semi-monthly (24 in a year) and monthly.
Updated Payroll Tax Tables from CRA
Thursday, December 22nd, 2011The CRA releases updated payroll tax tables on January 1. Updates may be released on July 1, and occasionally on other months.