In part three (of our four part series), we are discussing how payroll “black holes” may be costing you money and impacting financial reports for your small business.
There are 3 significant payroll black holes to watch for:
- The amount showing on your reports at the end of the month, as owing to the government for source deductions, should equal the amounts you have deducted, plus the company portion of CPP and EI, during that month. If this is not the case, the following could be happening:
- The amount showing as owing is wrong
- You have paid the wrong amount to the government
- You have forgotten to pay the government some-where along the way and will be paying significant interest and penalties on the amounts missed.
- The reports are showing that an advance that was paid to an employee a long time ago, is still owing by the employee. If this is the case, the following could be happening:
- The advance was taken from an employee and not recorded properly.
- The advance was not taken and the employee still owes it. It is possible that once this is discovered the employee is no longer with your company and there is no way of getting the money owed to you.
- When you don’t use a payroll company to calculate pay cheques, and they are calculated with software other than the bookkeeping software, the following could be happening:
- You are deducting too much CPP and EI. These deductions have an annual maximum. It is easy to miss when these maximums are reached.
- T4’s are very time consuming to prepare and the chance of error is very high.
If you identify a payroll black hole in your bookkeeping, contact your bookkeeping service to see what they can do to fill the hole and make sure you are not wasting money and getting accurate financial reports.