Self-Employed - getting a GST/HST Number

[AuroraGG]

I thought someone in here might be able to help me. Presently I work from home, self-employed contractor/freelancer. I am considering adding a new type of business (still in the "thinking stages", but one where I will mainly still be working from home. The difference is that I will be selling a final product; and as such would have to charge tax on the sale.

I've been looking on different Business and Canadian government Web sites and my book keeper is presently away, or I'd ask him (heh). Does anyone know right off if I would be required to register as a business in order to apply for a GST/HST number?

TIA!
Aurora

[JulieH]

I believe that when you apply for a GST number, you're automatically given a Business Number as well, assuming you don't already have one.

I did it this way earlier in the year so my GST number and Business Number are very similar.

ie - BN:12345 6789
GST #: 12345 6789 RT0001

check out this link as well: http://www.cra-arc.gc.ca/tax/business/topics/bn/bro/menu-e.html

[meatpie77]

Your Business # and GST # are the same, but only once you have to registered your Business Number with Revenue Canada and told them you are going to collect GST. You don't have to collect it if your gross annual sales/services are below $30,000, and if you are below that amount I highly advise that you avoid the headaches associated with collecting and submitting GST until you are required to.

PST/RST, however, is required when selling "products", and there is no minimum -- if you sell a product, you have to collect PST. You need to get a Vendor Permit from your local tax office to collect PST. A Vendor Permit also makes you exempt from paying PST on items that you plan on reselling.

Word of advice: keep track of how much tax you collect, and keep that amount in the bank for when it's time to pay. The first time I had to remit sales tax, I had all my money tied up in the business, and boy did that first 6 months of PST collection add up to alot! I was 3 months late in paying it, and had to eat a rather substantial penalty/interest fee for late payment

[brendonp]

I second meatpie on the PST #... if you can avoid it, it's a great one to avoid.

Technically speaking, the government can levy some pretty decent fines for failure to remit a PST return, even if you haven't collected any PST! That being said, I doubt they would, but it's always a possibility...

[AuroraGG]

Ok, that is great information - thank you. It looks like I had better do the research before jumping into this one!!! :)

[Bullseye]

You don't have to collect it if your gross annual sales/services are below $30,000, and if you are below that amount I highly advise that you avoid the headaches associated with collecting and submitting GST until you are required to.

If you don't register, it could end up costing you some money on goods you purchase for the business. You can't get the GST back on these if aren't registered. You can claim the whole amount inclusing GST as an expense, but the net result is less of it back for you.

[lizziejean]

Just to clarify, you have to collect GST on goods and services.
You MUST register and collect when your sales (of good and services) are more that $30,000. per year.

You can register if your sales are less than that, but generally, if you are providing services, it is not in your best financial interest.

:?: if you are providing services, it is not in your best financial interest.
If you are registered for GST, you can claim back the GST you pay out to operate your business (buying inventory, overhead ) and this is deducted from the gst you collect on your sales and you remit only the difference.

If you are selling your own services, as opposed to selling products, you are not paying out as much GST. You really have to crunch the numbers to see if it is worthwhile for you to register.
You must also consider who your customer is. If you are selling to other GST registered businesses, they don't care, because they will just claim back any GST they pay out. But if you are dealing with "consumers" or non-registrants, do you really want to add 7% to your price if you dont have to?

[meatpie77]

If you don't register, it could end up costing you some money on goods you purchase for the business. You can't get the GST back on these if aren't registered. You can claim the whole amount inclusing GST as an expense, but the net result is less of it back for you.


Very true, but there are creative and simple ways get around losing money from GST that you've paid. It's really dependant on the situation that your business is in -- if, say, you require lots of office supplies constantly, and it's worth the effort to expense a large amont of the GST you're paying, then do it. If you are strictly a service-based (like, say, house painting) and don't necessarily have many expenses, then you're looking at a fair bit of effort just to save a few dollars.

Does that make sense? If I'm wrong, someone correct me please -- I'm pretty new at all this too.

[Bullseye]

Very true, but there are creative and simple ways get around losing money from GST that you've paid. It's really dependant on the situation that your business is in -- if, say, you require lots of office supplies constantly, and it's worth the effort to expense a large amont of the GST you're paying, then do it. If you are strictly a service-based (like, say, house painting) and don't necessarily have many expenses, then you're looking at a fair bit of effort just to save a few dollars.

Does that make sense? If I'm wrong, someone correct me please -- I'm pretty new at all this too.

No, that's pretty much correct, except maybe for the 'creative ways' bit. If you have a low or no overhead business, making less than $30k, then yes, probably not worth it. I added my post thinking of typical businesses, who often spend a lot of money in the first couple years on start up costs and other things.

[Jetran]

I second meatpie on the PST #... if you can avoid it, it's a great one to avoid.

Technically speaking, the government can levy some pretty decent fines for failure to remit a PST return, even if you haven't collected any PST! That being said, I doubt they would, but it's always a possibility...

Don't you mean avoid GST #?

[meatpie77]

Thanks for the clarification, Bullseye. I'm glad there's an accountant here to clear up our guesswork! :lol:

[Bullseye]

Thanks for the clarification, Bullseye. I'm glad there's an accountant here to clear up our guesswork! :lol:

Heheh...and for FREE, too! I normally get paid for this kind of advice. ;)

[ranny3]

What about PST? does a business have to collect and remit PST if it is under 30 000$ in revenue???

Everything I've read only mentions GST... :?:

[meatpie77]

What about PST? does a business have to collect and remit PST if it is under 30 000$ in revenue???

Everything I've read only mentions GST... :?:

There is no minimum revenue for PST collection. So, if you sell $1 in merchandise, by law you must have a vendor's permit and remit the PST on that $1.

[blainehamilton]

But what about here in alberta, where there is no pst, only gst?

[mcewen]

Most of the information here is good, but a bit needs to be clarified.

PST/RST, however, is required when selling "products", and there is no minimum -- if you sell a product, you have to collect PST. You need to get a Vendor Permit from your local tax office to collect PST. A Vendor Permit also makes you exempt from paying PST on items that you plan on reselling.

A VP does not exempt you from paying PST on items you plan on reselling. A PEC (or Purchase Exemption Certificate) does this. Call your local tax office for more information.

Technically speaking, the government can levy some pretty decent fines for failure to remit a PST return, even if you haven't collected any PST! That being said, I doubt they would, but it's always a possibility...

A 10% penalty on nil tax owing is still nil. The province (Ontario) does not fine for non-filing the PST returns if they are nil.

[yatyat]

so can you apply for a pst exempt number and a gst number if operate business under your own name and not registering for one? i have got my name approved and having a hard time deciding whether to register for it. also, the pst that i paid before the business is registered, would i be able to claim that back (it will be obvious that its related to the business).

thanks,

[yatyat]

bump.

[Spidey]

But what about here in alberta, where there is no pst, only gst?


We're lucky then. One less piece of paperwork to worry about.

I dont charge GST either. Sinmce I dont make $30,000 a year I dont botyher. Plus its incentive for people to hire me, as then they save the tax too

[blue_xii]

What if you collect GST from people but you don't exceed $30k in sales what happens then to that money? Do you just keep it as profit? Do you refund it? And here's the weird scenario, what if you make over 30k only after keeping the GST assuming you keep the GST you chraged for yourself.

[Bullseye]

What if you collect GST from people but you don't exceed $30k in sales what happens then to that money? Do you just keep it as profit? Do you refund it? And here's the weird scenario, what if you make over 30k only after keeping the GST assuming you keep the GST you chraged for yourself.

If you decide to not remit GST, then you also do not collect it! The CRA would be rather upset if you just pocketed it for yourself.

[nabeel]

also, the pst that i paid before the business is registered, would i be able to claim that back (it will be obvious that its related to the business).This PST you paid before registering, is it inventory for resale? If not, assuming you're in Ontario, it can not be PST exempt.

[x21hx]

Regarding GST and overhead, I heard that you can also claim back gst to gas, car maintanence, business related entertainment, portion of hydro condo fees if you work at home, phone bill.

Is that right or was I mislead?

Thanks for the tips from the experts!

[nabeel]

Regarding GST and overhead, I heard that you can also claim back gst to gas, car maintanence, business related entertainment, portion of hydro condo fees if you work at home, phone bill.That's right, that works for GST. They are called Input Tax Credits (ITCs). If you're GST registered, when you're reporting, you add up the GST paid and add up the GST collected and remit, or receive a refund for, the difference.

However, as someone mentioned, there's a minimum annual revenue level before you *have* to register for GST. That doesn't mean you have to hit that level to register, however.

Ontario does not allow you to claim ITCs for PST though. However, selling even $0.50 of PST-taxable products in a year requires you to register. In fact, even if you "regularly" bring in items for business use from out of province, you are required to register to self-assess PST on thos items.

[Jon Lai]

Do you need to be 18 to register for a GST number or as long as you have SIN# you're fine?