How Mismanaging Your HST Can Threaten Your Business
Navigating the Canada Revenue Agency (CRA) compliance can be intimidating. Everyone has heard a horror story of banks accounts being ceased.
A great bookkeeper can help you navigate the CRA. Not to knock accountants, but your bookkeeper knows the ins and outs of your business, they are there every month - not just yearly. They know the compliance rules just as much as the accountant, maybe even more!
Did you know that you don’t have to collect HST if you are under 30 thousand a year? Just starting out and don’t know the potential income, you can wait till you hit the 30 thousand before you start collecting HST for the government. Yes, you may have to charge HST on invoices, but this is NOT your money. You COLLECT it for the government. I have seen many businesses fall into the trap of using the money they have in their bank accounts, then have no money to remit for their compliance of HST.
My best advice is be a monthly remitter. Not only is it easier on cash flow, it keeps your bookkeeping current letting you know where you stand each month. If you are already an annual or quarterly remitter, I suggest making installment payments each month. In a very few occasions have I suggested having a separate bank account that holds the HST payments.
It's far too tempting to use that money when things get tight, and the outcome is always brutal.
You must remember that HST is NOT your money.
You collect it on behalf of the government. When you choose to use that money and not remit, then you are looking at potential problems. Interest that is incurred comes out of your own pocket. It’s not considered a business expense. You receive letters and phone calls from HST collections. They are firm but fair and will work with you to clear the debt, but if you can’t follow things, then sadly they can pull it from your bank account.
Should you find yourself in this position, a bookkeeper can be your biggest advantage in the navigation of CRA. We take out emotion and work with the CRA to make a payback system that works for you and the CRA.
We are the go between. We look at what you can realistically pay each month and manage it with what the CRA wants.
We suggest ways to pay back faster and keep you off the hamster wheel. The hamster wheel is what I would think to be the worst nightmare of any entrepreneur - including me.
I remit monthly!! Which one are you going to choose?
Marie HoltvedBookkeeperMH Bookkeeping Servicesmholtved@gmail.com519-589-7656