Stop Ignoring Your GST Payable

Sole ProprietorBookkeepingCorporate Taxation

Oct 1

Why Your GST Payable Account Matters

When it comes to managing cash flow, many business owners keep a close eye on sales and expenses but forget about one account that can quietly cause the most stress: GST Payable.

It’s not just about compliance with the CRA. If your GST Payable isn’t accurate and reconciled, you could end up with unexpected bills, messy books, and penalties that eat into profits.

Why GST Errors Happen

GST errors aren’t always obvious, but they show up later when reconciling or filing. Common causes include:

Prior year adjustments aren’t posted
- At year-end, accountants often make GST adjustments to true up the numbers. If those adjusting entries never get posted back into your bookkeeping system (like QBO), your GST Payable account will no longer match what the CRA has on file. That gap usually doesn’t surface until the next filing or audit, and by then it’s too late to fix without going back months or years.
Misclassified expenses
- For example, coding an expense as “out of scope” instead of GST-eligible means you miss the input tax credit (ITC). Over time, those missed ITCs inflate what you owe.
Unrecorded invoices, refunds, or credits
- A supplier credit that didn’t get entered or an invoice posted to the wrong period can cause balances to drift apart.
System mismatches
- Especially in QBO, if the Sales Tax tab balance doesn’t match your GST Payable account on the balance sheet, something is off. This mismatch is a red flag — and it means your filing won’t reconcile properly with CRA.

The Hidden Risks of Not Reconciling

Unexpected cash shortfalls
- GST is collected on behalf of the CRA — it was never your money. If you’ve treated it like working capital, the payable balance can come due at filing time and wipe out your cash reserves.
Misleading financial reports
- An inaccurate GST Payable balance distorts your balance sheet. That means your net income and cash flow reports aren’t telling the full story — making it harder to plan for growth or investment.
Snowballing errors
- A small misclassification today can grow into a much bigger issue across multiple quarters or years. By the time it’s discovered, fixing it is far more time-consuming (and costly).
Penalties and interest
- The CRA charges interest daily on unpaid GST and can add penalties for incorrect or late filings. Even honest mistakes can get expensive.

How to Stay on Top of GST

Reconcile monthly: Treat GST reconciliation like you do bank reconciliation. Verify that your GST Payable account matches what you expect to remit.
Cross-check in QBO: Always compare the Sales Tax tab to the GST Payable balance on your balance sheet. If they don’t match, investigate right away.
Review year-end entries: After your accountant finalizes the year-end, make sure all GST-related adjusting entries are posted into your system. If they aren’t, your opening balances will be wrong, and the errors will carry forward.
Track ITCs carefully: Double-check that GST-eligible expenses are coded correctly so you don’t lose credits.
Don’t touch GST funds: Keep GST collections in a separate account if possible. That way, you’re not tempted to use the money for operations.

Your GST Payable account isn’t just a compliance detail

It’s a direct reflection of what you owe the CRA and a key part of your cash flow. Ignoring it risks financial surprises, inaccurate reports, and costly penalties!

By reconciling monthly, double-checking year-end adjustments, and monitoring QBO for discrepancies, you can avoid surprises and stay confident in your numbers.