Hi Hutcheson & Co. LLP,
I own a business and was wondering if I should be charging HST on my sales?
Thanks for question XXXX. As a business owner it is important to determine whether or not you have to become an HST registrant because there are fines and penalties for businesses that do not appropriately collect and remit HST.
As a general rule you have to become a HST registrant if your total revenues exceed $30,000 during any four successive quarters. If this is the case, you are required to become an HST registrant and begin collecting and remitting HST on your sales. In addition, as a registrant you can claim Income Tax Credits (“ITCs”) on your expenses and recover the HST paid. You have 29 days from the day in which you exceeded the threshold to register, so it is recommended that if you anticipate your business will have more than $30,000 in sales, that you become an HST registrant to avoid any potential fines or penalties.
When registering you will have the option to choose how often you want to file your HST returns annually, quarterly or monthly (unless your annual sales are more than $1,500,000).
A business can also voluntarily choose to register for HST. The main advantage to this is that you will be able to claim ITCs on your purchases.
Registering for an HST account is relatively easy and can be completed over the phone or online. You will need to know some general information about your company, such as the yearend, structure (i.e. sole proprietorship or corporation), and have a business number or BN. To register for HST and or obtain a BN you can go to www.businessregistration.gc.ca or call 1-800-959-5525.
Once registered, you will need to ensure that you include your HST number on all your invoices, so that your customers can claim the appropriate ITCs.
HST returns can be filed electronically through your “My Business Account”. If you do not have a “My Business Account” information on how to register can be found at www.cra.gc.ca/mybusinessaccount. A “My Business Account” is a great tool for businesses as you can submit payments electronically, view the status of your returns, view your account balances and correspondence with the CRA.
As with other forms and taxes administered by the CRA, HST is not always as simple as remitting 12% of your sales and collecting 12% on your purchases. There are restrictions and limitations when claiming or remitting HST on certain types of income and expenses.
In addition, sales or purchases made with other provinces or countries can complicate things even further. Therefore, it is recommended that you discuss your situation with one of our qualified professionals to ensure that the appropriate amounts are claimed and remitted.
Rob Brown, CA
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