If you're thinking of starting your own small business, you may have heard that the first thing you need to do is register for a GST or HST number. Registering is the easy part, but what exactly is a GST/HST number and when do you actually need to get one?
What is a GST/HST number?
The GST/HST is a tax we pay on most goods and services, excluding basic food items, public transit and some real estate services. It's part of your business number, which also includes your payroll, corporate income tax and your import and export account. Canadian businesses apply to the Canada Revenue Agency for a business number, says Jerry Paskowitz, a Chartered Professional Accountant and partner at Sloan Partners, LLP.
"The business number is a unique 9-digit number with suffixes that identify the province that the business is resident in, as well as the program," says Paskowitz. "For instance, the payroll remittance account number for a Manitoba company will look like 123456789 MP0001 and a GST/HST account for an Ontario company will look like 123456789 RT00001."
When should I get one?
It may seem that all small businesses should immediately get a GST/HST number, but it really depends on the business. Paskowitz says that Canadian businesses that do not expect to have at least $30,000 in annual revenues are not required to have a GST/HST number, but you could consider registering for one anyway.
"I actually recommend doing so, since non-registered businesses are broadcasting their small size by not collecting HST. When a business is registered, it may then claim GST/HST paid on its purchases," he says.
If your business has revenue in excess of $30,000 in four consecutive calendar quarters, you have to register for a GST/HST number.
How do I get one?
There are three ways to register for a GST/HST number: by phone, fax or online. According to the Canada Revenue Agency, you'll need some information before your register.
- Your personal information: last name, social insurance number, date of birth, postal code
- Business information: name, address, number, type of business, name and social insurance numbers of all owners
Once you register, you'll receive notification and your GST/HST number. Keep it somewhere safe.
Filing HST/GST
Even if there are years when you collect nothing, you still have to file to indicate that you haven't collected anything. Filing can be done electronically, by mail, or in person at a participating financial institution.
Do I pay yearly or quarterly?
Business owners will want to put their GST/HST (and other tax) money aside. As for when to pay it, Paskowitz says the guidelines for filing are:
- $6,000,000 and over - monthly filing required
- $1,500,000 to $6,000,000 - quarterly required, monthly optional
- Less than $1,500,000 - annual required, quarterly or monthly optional
Even if you have the option to file yearly, Paskowitz encourages his clients to file quarterly. "GST/HST collection can be a problem without a good deal of discipline," he says.
Whether you pay quarterly or yearly, running a small business takes a lot of effort from the start. Registering for a GST/HST number can feel like an early step on the road to becoming a successful business owner.
