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  • May 5th, 2011 11:42 pm
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[OP]
Deal Fanatic
Jul 7, 2004
5246 posts
905 upvotes

Incorporating question

I'm going to incorporate a new bus at corporationcentre.ca.
There is:
Goods and Services Tax (GST) Account
Federal Payroll Deductions Account

For $10 each. My company is going to be a supplement company that sells supplements online, and 95% of business will be in the US. Do I need the GST account?
Federal Payroll Deductions Account, is this simply for payproll? So I'd assume I would need this if I have anyone taking salary?
I'm just confused because they have standard things checked off to purchase, but these two were left off, so I thought they might not be necessary.
Thanks.
9 replies
Newbie
Apr 18, 2011
16 posts
2 upvotes
montreal
You will need a GST account if:
a) your sales exceed $30,000. Since your sales are considered to be "zero rated" you are required to declare your sales even if you do not charge GST.
b) You want to claim the GST that you pay on expenses i.e. input tax credits. This could allow you to recover any GST/HST/QST that you pay on qualifying business expenses. More details at GST for new business owners

The payroll deductions account is only necessary if you intend to have employees.
It might make sense to speak to an accountant to help you set things up and guide you in the right direction.
[OP]
Deal Fanatic
Jul 7, 2004
5246 posts
905 upvotes
Thanks.
Do I need payroll if I'm the only employee though?
Newbie
Apr 18, 2011
16 posts
2 upvotes
montreal
If you are taking a salary from the corporation you will have to register. The other alternative, if you are the owner of the corporation, is to take a dividend instead of a salary. In this case you will not have to register, but you will have to file a T5 at the end of the year. See differences between salary and dividend.
[OP]
Deal Fanatic
Jul 7, 2004
5246 posts
905 upvotes
Thanks a lot.
Jr. Member
Jun 8, 2009
108 posts
21 upvotes
Toronto
1) I'm just curious why incorporate in Canada when you plan to do 95% of business in the US. Are you producing your supplements in Canada and selling to the US? Or are you buying them from suppliers and then ship them as needed?
2) Why pay $10 for setting up accounts? Do that yourself for free on CRA website.
3) Get good business liability insurance.
[OP]
Deal Fanatic
Jul 7, 2004
5246 posts
905 upvotes
beemer2009 wrote:
Apr 26th, 2011 10:35 am
1) I'm just curious why incorporate in Canada when you plan to do 95% of business in the US. Are you producing your supplements in Canada and selling to the US? Or are you buying them from suppliers and then ship them as needed?
I don't know, I just assumed that's what pretty much everyone does? Pretty much everything will be done in the US, products will made, stored, and shipped from the US. I have an online business now, since 2001 and 95% of customers are from the US.
2) Why pay $10 for setting up accounts? Do that yourself for free on CRA website.
Cool. Thanks.
3) Get good business liability insurance.
Thanks, that's definitely something I'll need to look into.
Thanks.
Banned
Apr 9, 2011
10 posts
UAE/Dubai
Consult a business adviser or a CPA for better implementation of business incorporation procedure.
Newbie
Nov 13, 2010
3 posts
toronto
hi baz5,

whether your company needs GST account is based on if the annual sale of your business is greater than 30,000.

In your case, the only point made it more confusing is that your are a small exporter, and 95% of your sales goes to US.

The question you are really asking is "if you need to collect GST for the 95% of your sales from US customer?"

Here is what you need to know.

"When the purchaser takes delivery of the goods in Canada, you do not charge GST/HST if the following conditions are met:
•the purchaser is not a consumer (a consumer is usually an individual who is buying the goods for his or her personal use);
•the purchaser exports the goods as soon as is reasonable in the circumstance after you deliver them;the purchaser does not buy the goods to consume, use, or supply in Canada before exporting them;
•the purchaser does not buy the goods to consume, use, or supply in Canada before exporting them;
•after buying the goods and before exporting them, the purchaser does not further process, transform, or alter the goods in Canada, unless it is reasonably necessary or incidental to transport them;
•you keep satisfactory evidence, for audit purposes, that the purchaser has exported the goods; and
•if the property being exported is electricity, crude oil, natural gas, or any good that can be transported by means of a wire, pipeline, or other conduit, the purchaser is not registered for GST/HST purposes.

If the above conditions for zero-rating are not met, you have to charge and the purchaser has to pay GST/HST on taxable supplies."

Then you can see that it really depends on if you can convenience your supplier that you are indeed a small exporter. Here is what you can use to make them wave your HST.

"A purchaser who is registered for GST/HST purposes can apply for authorization to issue an export certificate, which, when provided to the supplier, will cause the goods to be zero-rated."

So you need to apply for a exporter certificate from the Revenue of Canada.

If you need other tax tips, please do not hesitate to PM me. I am a CA runs a small practice in North York, currently open for clients.

Thanks.
[OP]
Deal Fanatic
Jul 7, 2004
5246 posts
905 upvotes
I'm not sure if I misunderstood you or the other way around.
There will be no product coming to Canada, except the small percentage that purchase.
I'm buying the product in the US, storing in the US, and have a fulfillment company shipping to customers from within the US.

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