HST (Harmonized Sales Tax) for Small Business Owners

Taxes can be a tricky subject, especially for a new small business owner. By now, most of calculatorus are at least somewhat familiar with the Harmonized Sales Tax (HST). It was implemented in 2010 to combine both the provincial sales tax (PST) and the Goods and Services Tax (GST) into a single consumption tax. In general, the HST applies to the same base of goods and services as the GST, with some exemptions for certain items.

As a small business owner, you may need to register an account with the Canada Revenue Agency to collect the HST; however, some new businesses may not need to register right away. An example of this would be small suppliers, as they do not need to register or charge HST.

Small suppliers are businesses whose sales are equal to or less than $30,000 over the last four calendar quarters, and thus, do not need to charge HST. This means if you are running a small business and your income sales fall below this level, you do not need to register. Businesses that anticipate making over that amount do not need to register until that $30,000 is reached, but it is important to note that you must register before the threshold is passed.

There are upsides to registering for an HST number early. If you have suppliers, they may charge you HST, which will be added onto your costs if you yourself are not charging it. You will also not be able to claim certain tax credits such as Input Tax Credit’s (expense credits) without your HST registration. In this way, registration can sometimes reduce your operating costs.  Registering for the HST also lends your business credibility, since customers might wonder why you are not charging it.

The CRA offers a quick online questionnaire to help you determine if you should register for the HST.

For more information on registering your company with the CRA, go online or call: 1-800-959-5525

One of the goals of the Centre is to empower small and medium-sized enterprises and give you the tools to achieve success. For more information about Halton Region’s Small Business Centre resources, services, business events and seminars, contact us by dialing 311, 1-866-442-5866, online atwww.haltonsmallbusiness.ca, by email at smallbusiness@halton.caor visit us at 1151 Bronte Road, Oakville. You can also follow us on Twitterand find us onFacebook.

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