How to Avoid a Big Tax Bill When COVID-19 Relief Ends

McLenehan and Associates

 

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McLenehan and Associates CPAs offers a wide range of services to our individual and business clients. In addition to the list of services below and our extensive knowledge of accounting practices, there are some things you can count on from McLenehan and Associates CPAs – honesty, accuracy, impartiality, confidence, and a willingness to listen.

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During this COVID-19 pandemic, our firm can help answer your tax questions.  We are here to provide trusted advice and guidance on how to navigate the changes to the tax filing deadline and more.

How to Avoid a Big Tax Bill When COVID-19 Relief Ends

Federal and Provincial governments will allow you to defer your tax payments now, but those taxes will eventually become due. Small businesses that postpone their remittances today will face a large bill when Canada’s COVID-19 relief programs end.
And taxes don’t get easier to pay when they are delayed and allowed to accumulate.

Read the Article: Should You Defer Tax Payments to Conserve Cash?

If you choose to defer your payments, here’s something that I have done in my own business that I recommend to clients:

  • I called my bank and had them set up a separate chequing account for my business, accessible by me via online banking. I have labelled this bank account “Taxes” in our online banking.
  • I take 12% of any deposits we receive and transfer them to the Taxes account. This provides the money required to make our GST and PST remittances each month.
  • I take 15% of any deposits we receive and transfer these funds to the Taxes account. This money is meant to pay our corporate taxes and my personal taxes as owner of the business.
  • Because I keep this money apart I always have the cash to pay our taxes.

By setting aside Tax remittances from cash for operating expenses you’ll ensure that the funds are available when its time for you to make a payment. You won’t mistakenly spend them on operations.

You don’t need to worry about a big tax bill and feeling unprepared.

Call your bank today and set up a separate account to hold your Taxes.

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