It’s that most wonderful time of the year – you’re ushering in the new year and now have to think about year-end payroll, remittances and tax documents.
OK, we may have oversold it a bit. Year end can be stressful for business owners, bookkeepers and accountants – especially if this is your first.
To ensure your year end is wonderful, you should start thinking about payroll and tax obligations. We’ve compiled a few tips to help you stay on top of your responsibilities and ensure a smooth transition into the new year.
1. Review and update employee information
Check that you have all of your employees’ current personal and financial information on file, including their full name, address, social insurance number, and any changes to their salary or benefits. This will help you accurately calculate their pay and deductions and ensure that you comply with tax laws.
2. Calculate and process year-end bonuses and payouts
If you plan on giving your employees year-end bonuses or other payouts, you’ll want to calculate and process these payments promptly. Don’t forget to include any applicable taxes and deductions in your calculations.
When completing year-end payments, always select the year in which that work was completed as the payment date. If you don’t, work completed in one year won’t be reported until the next.
3. Think about holiday lead times
Holidays are great for friends and family – but not so much for payments. Bank holidays like Christmas Day, Boxing Day and New Year’s Day will impact your payroll processing time. So check with your payroll partner and plan ahead to ensure your payments arrive when you want them to.
4. Review and update tax deductions and contributions
As the end of the year approaches, it’s a good idea to review your employees’ tax deductions and contributions to ensure they are up to date. This includes Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and income tax deductions.
5. File your T4 slips and summaries
By the end of February, you will need to file your T4 slips and summaries with the Canada Revenue Agency (CRA). These documents provide information about the income and deductions you have paid to your employees over the year. Ensure all your documentation is in order and file these documents on time to avoid penalties. Remember, tax documents and summaries are due at the end of February.
But you may have more than just T4s to complete; if you’ve hired contractors or employees from Quebec, you’ll need to send T4As and RL-1s, respectively. Check out our guide for a full breakdown of year-end tax slips. You can find more information on preparing for year end in Quebec here.
6. Implement an online payroll system
If you’re still using manual payroll processes, it’s worth switching to an online payroll system. These systems can help to streamline your payroll process, reduce the risk of errors, and provide you with up-to-date reporting and analysis tools.
When it comes to year-end reporting, errors are costly – literally. In some cases, a mistake might just cause a headache; in others, you could face a fine.
At PayEvo, we can ensure that your business complies with tax laws and that your employees are paid accurately and on time. Let us take care of payroll so you can focus on what you do best.