What can you do to ensure that your business calculates, tracks, and remits the correct amount of payroll taxes for your employees, in compliance with Canadian tax laws?

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BlackTom AI · Accepted Answer

Understanding the goal: ensure payroll taxes are calculated, tracked, and remitted accurately under Canadian tax laws. 
Option 1: 'Remit federal taxes and have employees remit their provincial/territorial taxes themselves.' This approach shifts tax responsibilities improperly onto employees for provincial/territorial taxes and ignores the employer’s duty to calculate and remit payroll taxes. It also bypasses combined payroll processing that ensures proper withholdings and remittances. 
Option 2: 'Calculate the taxes using a tax calculator and write checks for each payment.' While manual calculation can be done, this method is prone to human error and does not establish an integrated system for ongoing tax updates, rate changes, or automated remittance schedules. It fails to address the need for proper tracking and compliance mechanisms. 
Option 3: 'Set up payroll taxes in QBO' This option aligns with a structured payroll workflow in QuickBooks Online (QBO) or similar payroll software, enabling automatic calculation, tax rate updates, proper withholding, and remittance tracking in compliance with tax regulations. It centralizes tax data, reduces manual work, and supports timely remittance to tax authorities. 
Option 4: 'Group your employees by salary' Grouping by salary is unrelated to how payroll taxes are calculated or remitted; tax withholdings depend on tax tables, pay frequency, allowances, and jurisdictional rules, not simply on salary categories. It does not provide a mechanism for accurate tax calculation or remittance.

In summary, the approach that creates an integrated payroll tax setup within the payroll system (Set up payroll taxes in QBO) directly supports calculating, tracking, and remitting the correct payroll taxes in line with Canadian tax laws, whereas the other options either shift responsibility, rely on error-prone manual processes, or address an irrelevant factor like merely grouping employees by salary.

QBO25E1 - QuickBooks Online Module 7 Quiz

What can you do to ensure that your business calculates, tracks, and remits the correct amount of payroll taxes for your employees, in compliance with Canadian tax laws?

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