JENNIFER HALEY, CPA
Hi there, I'm Jennifer Haley, CPA. I'm here to help business owners get a handle on their finances so they can get back to doing the things they love.
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There is always confusion on whether a business needs to set up a GST/HST account. Just because your business is earning money, it doesn’t necessarily mean that you need to set up a GST/HST account with Canada Revenue Agency (CRA).
If your business does charge GST/HST to its customers on services/products sold, the business is required to remit these funds to the CRA. You will also be eligible to claim the GST/HST your business pays on business related expenses, these are called input tax credits (ITCs).
The $30,000 Rule
This rule is often the beginning of the confusion. If your business makes less than $30,000 in a total of 4 consecutive calendar quarters, you are considered a small supplier and are not required to open a GST/HST account. You would not charge this GST/HST to your customers.
Once your business makes revenue of $30,000 in 4 consecutive calendar quarters or less you are no longer considered a small supplier and are required to open your GST/HST account and begin charging GST/HST to your customers.
Here are the three scenarios that are most common and help you understand when you are no longer considered a small suppler and must open a GST/HST account.
See the scenarios in the below table to determine if you are a small supplier:
Other Reasons to Register for a GST/HST Account
Even if you have not reached the $30,000 threshold there are still other reasons you may want to register for an account:
I hope this was of help to you. Let me know if you have any questions.