Determining Sales Tax (GST/HST) for Your Online Business
Navigating sales tax in Canada can be a daunting task for many entrepreneurs, especially with the recent requirements for online businesses to charge GST. But don't worry—I'm here to simplify the process for you!
Key Considerations
$30,000 Revenue Threshold: If your global income exceeds $30,000, including earnings from the U.S. or overseas, you must register for a GST number and file a return. For instance, if you earn $10,000 from Canadian clients and over $20,000 from international clients, you need to comply with GST regulations.
Foreign Exchange: Converting USD sales to Canadian dollars for tax reporting adds another layer of complexity.
Provincial GST and HST: Understanding how these apply based on your province is crucial.
Registering for a GST Number
To open a GST/HST account, you can:
- Use Business Registration Online on the Government of Canada website.
- Complete Form RC1, Request for a business number.
- Call 1-800-959-5525 (be prepared to answer questions from Form RC1).
You'll need:
- Personal information: last name, social insurance number, date of birth, postal code.
- Business information: name, address, type, and social insurance numbers of all owners.
Charging GST/HST
Inform your customers when GST/HST is applied to their purchases. Use receipts, invoices, contracts, or online postings to indicate whether GST/HST is included in the price or added separately. Display your GST/HST number and rate on invoices, and specify if the total includes GST/HST or if it's listed separately.
Tracking GST/HST
Accurate tracking is essential and may require a more sophisticated system than anticipated. Start with a spreadsheet to list sales, GST, and totals. This will help you compile your GST return and ensure compliance, giving you peace of mind.
Software Solutions
I'm certified in various expense tracking software and can guide you in choosing the right one for your needs. Consider these options:
Benefits of GST Tracking
- Claim GST credits against payments.
- Develop a habit of tracking income, benefiting long-term business growth.
- Simplify year-end tax filing, reducing costs.
Need Assistance?
At KC and Company, we're here to make GST/HST tracking easy for online entrepreneurs. Whether you have a quick question or need comprehensive support, feel free to reach out. We love helping and chatting with you!
