So you’ve taken the plunge and started your own business. That’s great! There’s a lot to do – there is a reason entrepreneurs are so busy! One thing you cannot overlook, however, is that very important GST and/or QST number. Depending on the type of business you run and how quickly your sales escalate, you may not need one right away, but you might want to go ahead and make getting that number part of your operating plan because….
You have to collect taxes when your sales hit $30,000
Speaking in legalese, you have to collect and remit taxes when, “your total worldwide taxable supplies (including sales, rentals, leases, exchanges, transfers, barter transactions, etc.) exceed $30,000 in a given calendar quarter or in the four calendar quarters that precede the given calendar quarter.” – www.revenuquebec.ca. Rapid success can see you owing back taxes very quickly if your sales spike and you have not collected GST or QST. Having this process for collection in place before this happens is a good business practice.
You run a taxi service
If you are a taxi or limousine owner, you must collect and remit taxes.
You do business in Quebec while residing outside of Quebec
If you charge admission for services or events that take place in Quebec even though you live in another part of the country, you need to collect and remit taxes. For example, an artist that supplies custom paintings from his Alberta studio to his client in Quebec would have to add GST and HST to his invoices.
How do you get a GST/QST number?
Obtaining the number is not difficult. First, review the basic rules for applying. When you determine your eligibility, you can register using Revenu Quebec’s online service, by calling client services, or by filling out form LM-1-V.
How do I collect the taxes?
Once you have your GST/QST number, you must indicate it on your invoices. Separate the cost of the goods and services you have sold from the taxes you have to collect. List the taxes as an added cost on the invoices, making sure your clients can see how much they owe. Double check your calculations to ensure you are charging the correct amount. GST and HST are calculated differently and account for different percentages of the before-tax invoice amount.
Be sure to remit your taxes on time. You can remit monthly online through Revenue Canada, remit at your bank or mail cheques. You don’t want to skip remittances or use the money collected as income or for personal purchases. That can lead to very stiff fines, penalties and interest. And as mentioned, don’t delay in getting that number! If Revenue Canada determines that you owe taxes for previous sales, they will come asking for them.
Let us help
You have so much on your mind with your new company and its impeding success. If you find tax law to be less exciting than we do, let us help. AF Accounting is your partner for all your outsourced accounting needs, and we support entrepreneurs from their first days in business through their milestones and successes.
