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When do you need to charge GST?

With a huge surge in new businesses, both home-based and otherwise, we have noticed a ton of questions about business being asked to random people on social media. While the online community can be very helpful in many situations, asking questions about when to charge GST to those who don’t actually know, could get you in a lot of hot water. By hot water we mean it could cost you a lot of money—something that could destroy a small business.

The simple answer is, you charge GST when you pass $30,000 in sales. 

You do not have to register for a GST number prior to this, you may choose to register voluntarily if you make taxable sales, leases, or other supplies in Canada.

The effective date of registration is usually the day you request your GST/HST account (or up to 30 days before that day).

It is important to note that once you start charging GST, you do not stop when you have a bad year in sales and do not surpass the $30,000 threshold. 

While there are more details you can find on Revenue Canada’s website, the easy way to remember this is if you make more than $30,000 in GROSS SALES, you must start charging your clients GST.

There are benefits to charging GST. You can write off the GST you pay to other businesses for supplies and services for your business. Some people also believe it makes you look like a bigger company and perceive value there. 

What we really want to stress is that if you have financial questions like these, it is always best to go to credible sources. Directly to Revenue Canada’s site or your own accounting and bookkeeping team. 

If your business is growing and you do not yet have a bookkeeper or accountant to ask these types of questions, please call us! Do not take chances owing the government money when you can avoid it.

Please book a call on our website if you need accounting or bookkeeping support with your business. We are happy to chat with you and help secure the future of your growing business.

~ Jennifer, CPB

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