Being in debt is not fun, especially when your creditor is Canada Revenue Agency (CRA). However, when you start a small business, your finances are stretched to cover materials, labour and payroll. Unexpected expenses or a slow month for sales can crush your good intention to pay off your debt. Today, AF Accounting offers solutions for small business owners with CRA debt.
Different Types of CRA Debt
It can be easy to overlook CRA as a creditor. After all, they don’t give you a handy credit card to swipe at the store and in most cases, you don’t go to the bank and sign papers with them for a loan. The debts collected by CRA are related to their programs and services. For example:
- Income tax
- Tax remittance (GST, HST, QST etc.)
- Corporate taxes and deductions
- Overpayments (for benefits, CPP, grants, etc.)
- Student loans
When Will I Know I Owe CRA Money?
Be organized and practice good accounting/bookkeeping management. If this is not a strong point for you, contact a company that specializes in small business accounting. When you are detailed and organized, or when you have the right people in place to guide you, you will be aware of what you owe; for example, when your small business has to start collecting tax or when your student loans are coming due.
If you owe money, the CRA will contact you. If you think the collection call is a prank or scam, hang up and contact CRA to ask for verification. While there are scams that try to trick you into paying funds you don’t owe, CRA does make collection calls and sends notices by mail.
Yikes! I Owe Money! Now What?
The worst thing you can do at this point is to avoid the situation. This is no time for procrastination. Take action.
- If you can pay the full amount, do so to avoid penalties, interest and fines.
- If you cannot pay the full amount, contact CRA to discuss payment arrangements.
You will pay interest on a payment plan, but a plan can greatly ease the burden of an interrupted cash flow. Assess your options and choose the one that works best for you and your business.
If paying the money will cause financial hardship, you may qualify for taxpayer relief or other remedies – but you must contact CRA to discuss your situation. If you continue to default, your chances of getting assistance in paying your debt drop dramatically.
What if I Don’t Pay or I’m Rude to the Collection’s Agent?
In a word: Don’t. Don’t be rude. It’s not their fault you owe money. Don’t default. The CRA can take legal action against you and once legal action is underway, it is very hard to apply for taxpayer relief or other assistance. It bears repeating: don’t avoid the situation. The longer you ignore it, the worse it will get.
Let Us Help
Juggling the demands of a new or growing business is hard, but your accounting doesn’t have to be. Contact us. Our boutique accounting services are unique for small businesses and our variety of services ensure you get the help only with the aspects you need – saving you time and money. Visit our website to learn more.