Should You Register For GST/HST?
Anything related to business and taxes can be confusing, especially if your business is relatively new. Lately there has been a lot of noise about GST/HST, and many people are confused about whether they should register for it or not. Most people will tell you that they’re going to wait for registration until their sales reach a set amount. The reason they are saying this is because they really don't know the answer to the question.
It’s a grey area, but it’s one that you need to think about carefully.
So, Should you be Registering for GST/HST
Basically, if you don’t register, you will end up billing your customers more, because you’ll need to add on the GST/HST percentage pertaining to that particular province. This GST/HST amount will then be sent to the Government. Of course, that means you can also claim back the GST/HST amount you pay on any purchases from those who have registered. This is called an ‘input tax credit’, and you will deduct this from your tax return at the end of the tax year.
How Does a Business Register For GST/HST?
You can do this online quite easily, using the Business Registration Online facility. Once this is done, you will receive a GST/HST individual number and you will use this unique number when filing your returns at the end of the year. Strictly speaking, you don’t have to register for GST/HST until you start to earn an excess of $30,000 revenue per year. If you want to register before you’re at this level, you can do so.
Why would you do this before you reach the set amount? There are a few advantages:
● You’re likely to spend more than you earn in the first few months of opening your business. You can claim back the GST/HST you spend, which could then mean extra cash in the bank.
● Being registered and charging for GST/HST looks more credible and professional to your customers.
It’s important to weigh up the pros and cons before you decide to register for GST/HST early or not. This is entirely optional before you reach the $30,000 revenue point, but you should also be aware that the level at which this is charged depends on the province the business or service is based in and where the service is performed. This can vary the amount, so it’s a good idea to find out the cost of GST/HST in your province.
There are also some businesses which are exempt from registered for GST/HST, so checking things out with an accountant beforehand will give you the up to date, relevant information you need. This is the only way to find out the correct details for your particular type of business. We know that every business is unique in many ways, and in order to be 100% sure, professional advice is the way forward for you.
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- Written by: Jag Bath