Protecting yourself in the lockout: tax considerations and billing/invoicing alternatives
By CO Staff @canadaone | June 7, 2011
The Canada Post lockout/strike will affect tax filing processes across the nation for those with upcoming tax deadlines, which small businesses will still have to meet in spite of the postal disruption.
Self-employed workers must file their taxes with the CRA by June 15th. If you had any balance owing, it should already have been paid by April 30th.
Corporations with December 31st fiscal year-ends must file with the CRA by June 30th.
Employee source deductions must be paid by the 15th of every month to the HRSDC.
The CRA has said that any filing that is post-marked on the filing date or earlier will be considered on time, so make sure that you get your delivery post-marked if you decided to use Canada Post during the lockout.
With these dates fast approaching, other avenues may have to be taken to ensure that deadlines are met. The following are some options that you may want to consider.
Electronic Services with the CRA
The Canada Revenue Agency has various electronic filing services that allow people to file their taxes. NETFILE and EFILE allow both individuals and businesses to file their tax returns, and tax payments can be submitted through My Payment or be paid directly at most financial institutions.
The CRA has said that it will make mail drop boxes available at Tax Services Offices and Tax Centres for individuals and business taxpayers to submit returns, applications, or other correspondence to make payments. The boxes will be monitored regularly and managed on a priority basis. For a list of where these are located, visit the CRA website.
The CRA encourages people to apply for Direct Deposit, which would help avoid delays and interruptions. Completed direct deposit forms can be dropped off at any Tax Centre or Tax Services Office, or faxed to any of CRA's Tax Centres. A list of Tax Centre fax numbers is available here.
Use an Accountant or other Tax Professional
You may want to use an accountant or other tax professional for filing, as they can file directly with the CRA on your behalf. You will probably want to use someone who files taxes electronically, so you can avoid issues that arise with direct mail.
Note: There are a variety of accounting services offered by most financial institutions. The price of services will depend on a number of factors. For example, a self-employed worker would likely pay less than would an incorporated business.
With Canada Post and CUPW showing no signs of reaching an agreement, it would be wise for business owners to start thinking about other ways to stay on top of their taxes. Whatever path you choose, keep in mind that even though mail services aren't operating normally, tax deadlines remain the same.
Switch to credit card payments: PayPal enables quick set-up
To protect yourself during the lockout, here are several options that will help you do business without postal service.
E-commerce accounts can take time to set-up. Small businesses may want to create an account with PayPal, which will enable them to quickly postion themselves to accept online payments.
PayPal provides a way to complete transactions electronically that doesn't require implementing a complicated billing system. Signing up for a PayPal account will allow you to create and email invoices to your customers and receive credit card payments and bank payments securely.
The invoice you create and email has a Pay Now button which allows customers to pay directly into your account without being PayPal users themselves.
With a basica PayPal account, there are no fees to send an invoice and no additional costs for setup, monthly fees, or cancellation charges. However, there are transaction fees that vary depending on your location and total monthly sales. You may want to evaluate the benefit of signing up for a paid monthly account if you expect to have a lot of transactions.
For more information on this service visit the PayPal website.
Implement an Electronic Billing / Invoicing System
Though the postal disruption makes life more difficult, it could also present an opportunity to technologically update your business. If you haven't already established one, an electronic invoicing system would be a good alternative.
Systems can be set up that allow for both business-to-consumer billing and payment or business-to-business billing and payment.
According to CRM Magazine, electronic invoicing can provide companies with a number of benefits that can be both cost effective and efficient:
- Elimination of paper handling costs: by reducing costs associated with handling, postage, and filing, both business and customer can save money;
- Improved dispute resolution and improved reporting;
- Better timing of payments; and
- Better growth possibilities: as your business grows, electronic billing ultimately reduces the administrative costs that would arise in a paper-based environment.
There are a variety of software and application options that can help your business transition into electronic invoicing. Comprehensive e-billing systems such as Quickbooks or Verian, to name a couple, are readily available online. Freshbooks is another option that is a good fit with smaller companies. Exploring your options will help you determine which electronic invoicing system, if any, is right for your business.
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