Whoops, I Spent my GST!

One thing I learned when I first started out in small business was to open some operating bank accounts dedicated just to the business; one of them being a tax account. The small business I used to work for always put a portion of their GST away into the tax account so they could cover any GST to pay at the end of the period - thumbs up, good business practice.

​After five years in my own business I have seen how very easy it is to forget or not be able to put that portion of sales aside to cover the GST. In reality it's a challenge, you have an expense pop out of the blue, or you haven't quite budgeted properly to manage your outgoings. It's a learning curve for new business owners and we can all muck it up from time to time.

However, I have seen the opposite thing happen. Small business owners suddenly have income from great sales, there is a lot of money sitting in the main business account. It is very tempting to take that money as drawings, after all you've worked hard to earn it! But before you know it, a few GST payments have been missed. There are penalties and interest and it all adds up. You are a bit scared to call and arrange weekly/monthly repayments. You bury your head in the sand and hope it all goes away. It won't.

The best thing to do is accept you are behind. Call and arrange repayments as soon as possible (you won't get in trouble), and get back on track. Work out a budget, get someone to help you with your cashflow reporting, open that tax account and start putting some of your sales revenue into it. It really is that simple.