Question: Please tell me what to do? I have absolutely no debts accept Federal and Provincial taxes in the amount of $3000 per month in installments for my last years income. I have made an arrangement with both governments to make installments each month totaling $3000 per month. Now my business has declined this year 50% I cannot afford to pay the taxes from last year….what do I do? If I take another job with less pay I certainly cannot pay these taxes…monthly…I am willing to pay but what worries me is what happens to next years taxes I owe…if I get a regular job and own my own business how can I catch up on these taxes?
Answer: Without knowing what the future will hold, it’s impossible to create a perfect strategy. Here are your options:
First, you could pay whatever you can afford each month. If you can afford $1,500 per month, pay that. It’s possible that over the next few months your business will improve, and you will be able to get caught up in the future.
Your second option, as you mentioned, would be to get a “regular job” where taxes are deducted from your pay each month, so that at the end of the year you don’t owe any taxes. That solves your problem in the future, but does not deal with your old tax debts. It may be that it will take a long time to get caught up with the government.
To make your decision, you will need to decide whether or not your business is viable. In other words, in the future will you be able to earn enough to support yourself and to pay your taxes. If you are self employed you should remit your tax installments every month, or every three months; if you are always paying last year’s taxes this year, then your business probably isn’t viable.