Sales Tax As A Small Business Owner Making Under $30,000
When I talk to brand new business owners, one of the first questions I get is around GST/HST and when to register for it. I’ve been doing this for awhile now and here are all the do’s and don’t’s of GST/HST as a business owner who is making less than $30,000 in worldwide gross sales in a single quarter or calendar year.
Unless you’re a charity, taxi/commerical ride sharing, public service, these will fit your business. If you have more questions about the GST/HST program and how it applies to you and your business, book a GST/HST review call with me.
First, the do’s:
Do track of your sales and make sure you’re under $30,000 in worldwide sales in a calendar quarter or four consecutive calendar quarters
Calendar Quarters start on January 1, April 1, July 1, and October 1
Do be prepared to register within 29 days after total sales reach $30,001
Do track the type of sales you’re doing and services or products you sell
Use an accounting software, like Xero, to track everything
Now the don’t’s
Do NOT collect GST/HST before you are registered.
Do NOT record any expenses with GST/HST broken out.
Do NOT ignore it. If you report greater than $30,000 in sales on your tax return you will almost certainly get an audit to confirm whether you should be registered. If you missed registering for it, then you’ll be on the hook for the difference.
Other options
Voluntarily registering early means that you can write off the GST/HST Input Tax Credits (ITCs)
That’s the GST/HST paid on things like office expenses, supplies, professional fees, etc.
Only keep your sales under $30,000 period. If you’re just doing hobby business stuff, you might not want all the headache that comes with over $30,000.
Voluntarily registering early also might be better so that when you do have to register for GST/HST your customers or clients won’t see it as a major price increase (5%-15% increase).
Listen, I know this stuff can seem complicated or ‘back-burner’. I get it. I’ve been there. But, I’ve also had to retroactively register clients as well as keep an idea on sales. It’s so much easier to have someone on your side. There can be significant consequences if you aren’t paying attention and we do not want that!
Book a call with me today to discuss your GST/HST and setting up your systems.
For up to date information, you can get in touch with CRA. Or if that doesn’t sound fun… you can reach out to us at any time!
Disclaimer: This information is purely for general business purposes and may not exactly fit your needs. You should contact a bookkeeper, accountant, or CRA if you have any detailed questions or concerns.