When your in small business you have to get used to the CRA being your business partner. It’s not like you have any choice in the matter. When you open a business you are officially partnered with the Canada Revenue Agency. This business partner is the most ruthless and vicious that you will ever encounter. Let me advise you that they are not your friend.
What is interesting is they like to think that they are. They have the friendliest tone and voice and they never yell and make you feel like your time is always available for them. I have had my fair share of government audits in the 11 years I have been in business. Most are just a waste of time and others they have found reasons for me to pay a hefty penalty and interest on a late payment of my Source Deductions. This interest and penalties will crush your business. NOTE: as a owner (director) you are responsible no matter what for the payment of these taxes and as such right to death you will need to make the payments to the CRA.
The bottom line, you just have to accept the CRA is a part of running a business in Canada (and the USA) and you need to get used to it. However, I found out this past week the CRA is not only in the business of collecting the money of taxes but they are now in the collection business overall. My phone call with the CRA agent this week was quite interesting in the fact that I advised the CRA agent the HST on money I haven’t collected yet won’t be paid as I can’t get it from my clients.
The agent advised me to send him [by fax if you can believe it, does that still exist?] my Accounts Receivable list and they will go and collect it. I was stunned was an understatement, when I asked him when did the CRA become a collection agency?
I was told the CRA will collect on any Accounts Receivable and assist in making sure that the HST is collected. This got me even more concerned thinking that the government is now going after all the receivables and we no longer even the to be in business to ask for payment.
Capitalism is going in a new direction as I can’t quite figure out how a business will be in business long when the CRA is doing all the collections. I’m sure relationships won’t be that solid when CRA is now asking for payment or going directly into the bank accounts of your clients.
So the bigger question is do we need to have the CRA in the collection business? Do they not understand how cash flow works and further their big Goliath Powers are not necessarily positive but truly will hurt small business operations. In summary, I’ll handle working with my clients and trying to collect the bills on my own. The government is just going to have to wait like the rest of us small business owners as that’s the way the cash flows.