The Tax Murderers

My purpose in life now is to aid financially troubled businesses.  More specifically, come to the aid of businesses when they get sued by suppliers, creditors, collection agencies etc and negotiate an out of court settlement that benefits all parties.  In the past year I have worked with 19 businesses in such trouble, handling some 31 cases.  Happily I report that 29 of those cases were settled to all parties satisfaction without judgments being entered.  In one case I fired my own client and the other case simply wasn’t a good enough settlement for my client to accept, so  he opted to go to court.  Why do these companies get into trouble and why do they ignore matters until it gets so serious you  might (or might  not) ask?  There are a myriad of reasons for getting into financial problems but they include overextension of credit, unanticipated reductions in sales revenues, unanticipated increases in expenses and ignorning tax liabilities.  I’d like to talk right now about that last item….tax liabilities.  Almost every case I see now I see that the business is behind in their tax payments to the feds for payroll remittances, GST or HST and Income Taxes.  Once the bill collectors at CRA get fed up with you, they send in their auditors, (the Hitman) gather all the information they  need to go after you such as bank account info, receivables info (intelligence) and they seize them without notice. (commit an act of murder) The business is essentially shut down.  I have helped some businesses recover from this disaster….but why not avoid it?   New business owners I’m talking to you!  When you set up  your current account at the bank, set up a tax account as well in which you can transfer your tax liabilities out of your regular chequing account so the funds are separated.  When I make a sale and a cheque comes in I deduct 13% for HST and transfer that to my tax account, I also deduct another 25% for Income Tax and put that in the tax account.  The remainder is left in the chequing account to deal with day to day operations.  If you keep doing this for all of your tax liabilities you will have a fattening account that your banker will be impressed with.  He may even extend credit to you more favourably because you have it.  You may be able to give yourself short term loans from it.  Mainly,  you will have peace of mind when it comes time to do your quarterly HST remittances, payroll remittances and you will have your income tax payable at year end.  If more businesses started out this way a lot more would avoid  being murdered by the tax man.  I just see this so often I had to comment on it.  Hopefully someone out there will see this blog and follow the free advice!  Don’t let your business be another tax fatality!   Please check back in a week’s time for another commentary and thanks for reading.  BTW, you can check me out on Haligonia.ca where I was interviewed by Dr. Paul in the “Death of Truth” series.  Here’s a link to Youtube to the first of a three part video, be sure to locate part II and III.  http://www.youtube.com/watch?v=lRrMEf0e45E