GST When Do You Need to Register
What is GST and who and when do you need to pay it as a small business owner? GST, or Goods and Services tax is a sales tax that is charged on almost all goods and services that are sold in Canada.
The current 2022 GST rate in Canada is 5%. You will see this 5% amount added to your bills. If you are a small business owner depending what your earnings are, you should be extracting this 5% GST from each receipt that you have paid and then remitting your GST to the CRA every quarter or annually.
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Let me explain in more detail what it is you need to do and when.
During the pandemic we saw many small businesses opening. People were not necessarily quitting their jobs (although some did). They were opening what is called a side hustle.
Most of these businesses were earning very little at first, which is normal when a business is first opened. So, there was no need to add to their invoices the 5% GST amount.
But as some of the businesses grew then GST was something most people had questions about. The most popular questions were, “how much does my company need to be making to be able to add GST onto the invoices for our customers”. And “how do we get a GST number to be able to remit GST”.
To be required to charge GST and remit the GST to the CRA comes down to just two factors:
1. The type of supply you are selling.
2. The number of sales you have.
Not all businesses are required to charge GST. As well as not all services are subject to GST. The following link to the CRA website will allow you to calculate if you are required to charge and remit GST.
When and how do you remit your GST? See the points below and a link to help you from the CRA.
• If your business is no longer classed as a “small business”. This means your sales exceeded $30,000 or more in a single calendar quarter (3 consecutive months).
• $30,000 within four consecutive calendar quarters. Do not mistake this for a calendar year.
• If your business is at the above amount you are required to register for a GST number. This will allow you to begin to charge, collect and remit your GST tax.
This is where you will need proper record keeping. A bookkeeper will make sure that your GST is recorded from every transaction and that you remit your GST on time every time.
If you don’t have the time to keep track of this yourself then you are in need of a bookkeeper. Please contact me for any questions that you may have about my bookkeeping services. I can help keep you on top of your finances and in good standing with the CRA.
This is not one of those things you can keep putting off. So, if you don’t have the time or the know how then contact me.
As always thank you for taking the time to read my blog.
If you have any questions, please don’t hesitate to reach out.
Sincerely,
Rebecca C Penner CPA, CGA
