In this series we are looking at the responsibilities Canadian Amazon retailers have to Canada Revenue Agency. Part 1 explained how Canada Revenue Agency (CRA) classifies eCommerce retailers. Part 2 explored the potential structures of your eCommerce setup, and Part 3 looked at how to combat the disadvantages faced by Canadians selling digital products. Part 4 discussed import taxes and duties.
Today you’ll learn why it’s a good idea to set up your CRA business account early – even before you hit the minimum threshold for collecting GST and HST.
What is a business number?
A business number is how CRA identifies your business. This number goes on all of your correspondence and tax documents.
When do I need a business number?
You need a business number to open any CRA program account, to collect GST/HST, and to incorporate. Many small business owners register when they reach the threshold to collect and remit GST, but it is a good idea to get your business number earlier than that. The general threshold is revenue of $30,000 or more in a year, but the regulations differ slightly based on the type of supplier and the business structure.
Why should I register early?
Even if you are just starting out on Amazon marketplace and your revenues are small, establish good business practices from the start – namely, keeping your personal and business income/expenses separate. Having a business number, self reporting, and collecting and remitting GST early gives your business a firm foundation for growth, and prevents retroactive GST should you have an unexpected good month and tip the $30,000 mark close to the end of a year.
Another benefit of registering early is, with an GST/HST number, you can claim input taxes credits (ITCs). These are credits you can claim for your business and do not apply to personal expenses. To make the claim you must track the GST/HST on applicable purchases. Keep all your receipts (always have a paper trail). When submitting your GST/HST remittance form, indicate the ITCs where indicated (Line 106). This amount will be deducted from the total. Ensure you know what is and what is not allowed as an ITC.
How do I register?
It’s actually quite easy. Amazon sellers can simply go online, or register by fax, mail, or over the phone. Residents of Québec can register through Revenu Québec.
Navigating My Business Account
Once you have a business number, you can go online to My Business Account. Log in by using a sign in partner – this is simple if you already bank online; you select your bank and use your normal bank log-in from the options provided. Or, log in with your CRA ID and password. On your home page, you have all your options. You can read your mail (and opt to have e-notices sent instead of snail mail), file documents, update your profile, open and close GST accounts, request rulings and refunds, check your account balance and more.
Can I make payments in My Business Account?
To remit GST, taxes, or other payments to CRA for your business, go to My Payment. (Note that My Payment can also be used for personal taxes and remittances.) My Payment accepts debit only, including Interac, Debit Mastercard, and Debit Visa. To pay by credit card or PayPal, you must connected to a third-party provider via a link on the My Payment home page.
The Online Advantage
My Business Account and My Payment make it easy to track, report, remit, and follow the many regulations associated with business ownership in Canada. Remember, your eCommerce business is viewed as any other viable business by CRA, even if selling on Amazon is a side gig to your full time job.
Take advantage of the online options and set your business up the smart way from day one. Get a business number, collect and remit GST/HST early, and manage all your correspondence and reports from one easy location.
AF Accounting and Amazon Sellers
We hope you enjoyed our five-part guide for Amazon sellers. Remember, AF Accounting has many tools and resources for eCommerce sellers, including Xero and A2X. Contact us today to learn more.
Is CRA out to get you? Watch us bust myths in this blog post.
