As a business owner, it is important for you to be making the right sorts of decisions for the future, and this involves giving plenty of thought to improving your sales and the amount of revenue that you accrue. There are a few things you need to consider with this, and one of the main ones is considering whether you should be charging GST on your sales.
Goods and Services Tax (GST) is a sales tax that has existed in Canada since 1991, and is a levy applied to specific goods or services that businesses sell. Charging GST on your company’s sales is required, unless your company has some kind of exemption. However, even if you are not required to, you may want to apply for GST because of the tax benefits as a business.
So let’s look at when you should be charging GST and what the benefits are.
What are the conditions?
There are two main things you need to keep in mind when it comes to charging GST as a business that is no longer a small supplier, and they are:
- >$30,000 of worldwide sales in a single calendar quarter – this makes you no longer a small supplier. And you will need to register no later than the day of the supply that made you earn more than $30,000.
- >$30,000 of worldwide sales over the previous 4 consecutive calendar quarters – you need to make sure you register no later than the beginning of the month you stopped being a small supplier.
Before you charge
Before you can charge GST you need to apply for it, and this can be done online, over the phone, or in person. And it’s definitely best to do this as soon as you can when it comes to running and developing your small business, especially if you want to grow the company quickly. When you apply you are going to need to collect GST on the revenue that made your company earnings exceed $30,000, and register within 29 days of the day this occurred.
When you apply you will receive a business number, which you will use on invoices and tax-related affairs.
Now, there are definite benefits to registering for GST even though you may not be required to. If you think you will have GST taxable expenses, there are financial benefits as a business. For instance, you can claim ITC for the amount of GST you’ve paid. Claiming deductions helps bring money back to the business. Furthermore, lack of a GST number can showcase your status as a ‘small supplier’ and this might be something you’d rather avoid.
Planning ahead is so important; if you feel your business might break $30k per year, or you are planning for this to be the case, it is well worth doing this in advance so you are prepared to be a more successful company in the future. Get in touch with us to talk about registering for GST and how this can benefit your business.