Registering for a GST/HST number is not always required by a sole proprietor, but when is it required?

• If you provide taxable supplies or services and you exceed $30,000 of revenue in four consecutive quarters, then you should be registering for a GST/HST number.
• If you do not exceed $30,000, but you want to remit GST/HST then you can voluntarily register.

 What are four consecutive quarters?

Below is an illustration of four consecutive quarters for a December fiscal period.

It is a common mistake to think, “I did not make over $30,000 in 20XX, I do not need to register for a GST number.” Did you make over $30,000 for any of the above consecutive quarters? For example:

If so, you may be liable to remit GST/HST, plus you could owe interest and penalties for filing late.

Benefits of voluntarily registering:

• You may be eligible to claim Input Tax Credits (ITCs) to recover the GST/HST paid or payable on your business expenses. (for example: start up costs, fuel costs, office expenses, etc.)
• You may be eligible for the quick method of accounting for GST/HST. (WATCH FOR MY NEXT POST TO EXPLAIN HOW THIS COULD SIMPLIFY YOUR BUSINESS)

What do you need to register for a GST/HST number?

• You must have a fiscal year end. In most cases sole proprietors have a fiscal year end, the same as a calendar year end, of December 31.
• Determine how much revenue you make in a year so the CRA can assign you a reporting period.

Reporting Periods

Reporting periods are assigned by the CRA monthly, quarterly, or annually. They are based on your estimated tax liability, for the first year. The more revenue you generate, the more frequent your GST/HST reporting period will be.

Where can you register?

You can register through the CRA by phone, mail or through us! 

What do you do once you are registered?

1. Start charging GST/HST on your invoices. Don’t forget to put your GST/HST number on your invoices.
2. File your GST/HST return each reporting period. (Monthly, quarterly, or annually, depending on what remitting period you were assigned.)
3. Track your ITC’s that apply to all your business expenses. (consider the quick method)
4. Remit the GST/HST you collected throughout the period to the CRA.

A good rule of thumb is to keep a separate bank account for the GST/HST you have collected. This will help to ensure that you have the funds to remit to the CRA and it will also double as a tracker for how much GST/HST you collected in the period.

Check back next week to see if you can elect to use the quick method of accounting for GST. The quick method could save you time, money, and avoids tracking GST paid on expenses!

If you think you may have a GST issue, please contact us by phone or email and we would be happy to have you in for a consultation.