Figuring out payroll deductions can be a daunting task. Rules change every year and you could be faced with that dreaded letter from the government telling you to top-up your remittances to them. However, if If you have recently started hiring people or if you want to learn more about how to do your payroll in Canada, these steps should help you get started.
1. Determine what pay frequency will be best for your company, such as weekly, biweekly (most frequently used), monthly, semi monthly etc.
2. Develop a timekeeping system to track employees’ hours, such as time sheets, time clocks, schedules etc
3. Determine method of calculating the employee’s’ wages and deductions, whether it be through purchasing software to perform calculations internally or hiring a payroll service provider.
4. Remit CPP, EI and Income Tax deductions as well as employer portions of CPP and EI to CRA based on your frequency discussed above.
5. T4 and T4A slips must be filed with CRA no later than the last day of February of the following calendar year to report employees’ income and deductions.
6. Payroll records and files must be kept for six years.
Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts and payments by an individual or organization. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies. There are some common methods of bookkeeping such as the single-entry bookkeeping system and the double-entry bookkeeping system. But while these systems may be seen as “real” bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.
Bookkeeping is usually performed by a bookkeeper. A bookkeeper , is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing the “daybooks”. The daybooks consist of purchases, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct day book, suppliers ledger, customer ledger and general ledger.
The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.