GST and QST – Montreal
The same situation also applies to tax money.
The same situation also applies to tax money.
The average tax rate for most self-employed workers is 30% (it may be higher or lower depending on income). Sound tax management means that every time you collect money from a sale, you should take 30% of that money and “set it aside” until the day you file your tax return and have to pay your taxes.
Collecting money from sales, appropriating it, and using it as if it belonged entirely to us sometimes leads some business managers to serious problems with the government (balances due, interest, and penalties) and with their business (debt, closure, and ultimately bankruptcy) when the time comes to pay the balances due.
Sound management of the cash generated by our sales must be implemented by knowing which amounts belong to us and which belong to the government. Sound cash management will allow you to live with fewer worries, improve your quality of life, and continue to enjoy being the manager of your own business.
If you are unsure about how to proceed or if you feel that you are starting to sink (slowly but surely), don't hesitate to consult us.
Unfortunately, a common situation is a lack of money when it comes time to remit the taxes collected on our sales (products or services) to the government.
It seems easy to lose sight of the fact that the tax money (GST/QST) we charge our customers does not belong to us. In fact, it belongs to the government. Some will say that they can keep the taxes they pay on their purchases, which is true.
The problem arises when we decide to use all the money and “work something out” when the time comes to pay it back. The best way to proceed is to separate this money from the amount of the sale and “set it aside” without touching it.
You can even invest it, which means you'll be making money with the government's money.
All that's left to do is wait until the GST/QST report is produced to find out how much you have to send and how much you can keep for yourself.
