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Self-Employed - getting a GST/HST Number

Posted: May 8th, 2006 10:20 am
by AuroraGG
I thought someone in here might be able to help me. Presently I work from home, self-employed contractor/freelancer. I am considering adding a new type of business (still in the "thinking stages", but one where I will mainly still be working from home. The difference is that I will be selling a final product; and as such would have to charge tax on the sale.

I've been looking on different Business and Canadian government Web sites and my book keeper is presently away, or I'd ask him (heh). Does anyone know right off if I would be required to register as a business in order to apply for a GST/HST number?

TIA!
Aurora

Re: Self-Employed - getting a GST/HST Number

Posted: May 8th, 2006 3:04 pm
by JulieH
I believe that when you apply for a GST number, you're automatically given a Business Number as well, assuming you don't already have one.

I did it this way earlier in the year so my GST number and Business Number are very similar.

ie - [rfdlink=/forums/autolink/redirectpage.php?linkid=51]BN[/rfdlink]:12345 6789
GST #: 12345 6789 RT0001

check out this link as well: http://www.cra-arc.gc.ca/tax/business/t ... enu-e.html

Re: Self-Employed - getting a GST/HST Number

Posted: May 8th, 2006 3:54 pm
by meatpie77
Your Business # and GST # are the same, but only once you have to registered your Business Number with Revenue Canada and told them you are going to collect GST. You don't have to collect it if your gross annual sales/services are below $30,000, and if you are below that amount I highly advise that you avoid the headaches associated with collecting and submitting GST until you are required to.

PST/RST, however, is required when selling "products", and there is no minimum -- if you sell a product, you have to collect PST. You need to get a Vendor Permit from your local tax office to collect PST. A Vendor Permit also makes you exempt from paying PST on items that you plan on reselling.

Word of advice: keep track of how much tax you collect, and keep that amount in the bank for when it's time to pay. The first time I had to remit sales tax, I had all my money tied up in the business, and boy did that first 6 months of PST collection add up to alot! I was 3 months late in paying it, and had to eat a rather substantial penalty/interest fee for late payment

Re: Self-Employed - getting a GST/HST Number

Posted: May 8th, 2006 4:35 pm
by brendonp
I second meatpie on the PST #... if you can avoid it, it's a great one to avoid.

Technically speaking, the government can levy some pretty decent fines for failure to remit a PST return, even if you haven't collected any PST! That being said, I doubt they would, but it's always a possibility...

Re: Self-Employed - getting a GST/HST Number

Posted: May 9th, 2006 9:01 am
by AuroraGG
Ok, that is great information - thank you. It looks like I had better do the research before jumping into this one!!! :)

Re: Self-Employed - getting a GST/HST Number

Posted: May 10th, 2006 1:51 pm
by Bullseye
meatpie77 wrote: You don't have to collect it if your gross annual sales/services are below $30,000, and if you are below that amount I highly advise that you avoid the headaches associated with collecting and submitting GST until you are required to.
If you don't register, it could end up costing you some money on goods you purchase for the business. You can't get the GST back on these if aren't registered. You can claim the whole amount inclusing GST as an expense, but the net result is less of it back for you.

Required to register and collect GST

Posted: May 10th, 2006 2:10 pm
by lizziejean
Just to clarify, you have to collect GST on goods and services.
You MUST register and collect when your sales (of good and services) are more that $30,000. per year.

You can register if your sales are less than that, but generally, if you are providing services, it is not in your best financial interest.

:?: if you are providing services, it is not in your best financial interest.
If you are registered for GST, you can claim back the GST you pay out to operate your business (buying inventory, overhead ) and this is deducted from the gst you collect on your sales and you remit only the difference.

If you are selling your own services, as opposed to selling products, you are not paying out as much GST. You really have to crunch the numbers to see if it is worthwhile for you to register.
You must also consider who your customer is. If you are selling to other GST registered businesses, they don't care, because they will just claim back any GST they pay out. But if you are dealing with "consumers" or non-registrants, do you really want to add 7% to your price if you dont have to?

Re: Self-Employed - getting a GST/HST Number

Posted: May 10th, 2006 2:12 pm
by meatpie77
Bullseye wrote:If you don't register, it could end up costing you some money on goods you purchase for the business. You can't get the GST back on these if aren't registered. You can claim the whole amount inclusing GST as an expense, but the net result is less of it back for you.

Very true, but there are creative and simple ways get around losing money from GST that you've paid. It's really dependant on the situation that your business is in -- if, say, you require lots of office supplies constantly, and it's worth the effort to expense a large amont of the GST you're paying, then do it. If you are strictly a service-based (like, say, house painting) and don't necessarily have many expenses, then you're looking at a fair bit of effort just to save a few dollars.

Does that make sense? If I'm wrong, someone correct me please -- I'm pretty new at all this too.

Re: Self-Employed - getting a GST/HST Number

Posted: May 10th, 2006 2:28 pm
by Bullseye
meatpie77 wrote:Very true, but there are creative and simple ways get around losing money from GST that you've paid. It's really dependant on the situation that your business is in -- if, say, you require lots of office supplies constantly, and it's worth the effort to expense a large amont of the GST you're paying, then do it. If you are strictly a service-based (like, say, house painting) and don't necessarily have many expenses, then you're looking at a fair bit of effort just to save a few dollars.

Does that make sense? If I'm wrong, someone correct me please -- I'm pretty new at all this too.
No, that's pretty much correct, except maybe for the 'creative ways' bit. If you have a low or no overhead business, making less than $30k, then yes, probably not worth it. I added my post thinking of typical businesses, who often spend a lot of money in the first couple years on start up costs and other things.

Re: Self-Employed - getting a GST/HST Number

Posted: May 10th, 2006 4:33 pm
by Jetran
brendonp wrote:I second meatpie on the PST #... if you can avoid it, it's a great one to avoid.

Technically speaking, the government can levy some pretty decent fines for failure to remit a PST return, even if you haven't collected any PST! That being said, I doubt they would, but it's always a possibility...
Don't you mean avoid GST #?

Re: Self-Employed - getting a GST/HST Number

Posted: May 10th, 2006 6:43 pm
by meatpie77
Thanks for the clarification, Bullseye. I'm glad there's an accountant here to clear up our guesswork! :lol:

Re: Self-Employed - getting a GST/HST Number

Posted: May 10th, 2006 9:29 pm
by Bullseye
meatpie77 wrote:Thanks for the clarification, Bullseye. I'm glad there's an accountant here to clear up our guesswork! :lol:
Heheh...and for FREE, too! I normally get paid for this kind of advice. ;)

what about PST?

Posted: May 22nd, 2006 5:47 pm
by ranny3
What about PST? does a business have to collect and remit PST if it is under 30 000$ in revenue???

Everything I've read only mentions GST... :?:

Re: Self-Employed - getting a GST/HST Number

Posted: May 22nd, 2006 8:05 pm
by meatpie77
ranny3 wrote:What about PST? does a business have to collect and remit PST if it is under 30 000$ in revenue???

Everything I've read only mentions GST... :?:
There is no minimum revenue for PST collection. So, if you sell $1 in merchandise, by law you must have a vendor's permit and remit the PST on that $1.

Re: Self-Employed - getting a GST/HST Number

Posted: May 29th, 2006 1:39 am
by blainehamilton
But what about here in alberta, where there is no pst, only gst?