Congratulations, you have either started a new business or are planning on doing so. Now, you are wondering if you should apply for HST with the federal government. To provide a quick answer to this question, setting up an HST account with Revenue Canada is only mandatory when the business earns $30,000.00 or more within the same year. If you are still wondering if you should apply for HST, here are some things to consider:
Who your clients will be? If you are dealing with individual customers or small businesses, they may appreciate not having to pay HST on your goods or services. You can use not charging HST as a promotion for your business by stating “no sales tax” or “HST on us” for example. People love not having to pay the HST tax.
Another item to consider for whether to set up HST is regarding your expenses in setting up the business. When you initially start the business, how much will you have purchased to set it up. If you have spent a lot to get your business operational, you can obtain back the HST you have paid out once you open the HST account.
Another point is that most existing businesses understand that the HST is not required until you earn the $30,000.00. If you are looking at getting medium to larger businesses as clients, whether to set up or not set up the HST can work either for or against you but typically against you. Existing businesses typically want to assume that the business they are doing business with is established enough to have sales above the $30,000.00.
By the examples I have provided, it may be worth consideration before you decide whether to proceed to set up the account now or in the future when the sales reach the required $30.000.00 for mandatory set up.
You may want to discuss with your accountant or bookkeeper what is best in your given scenario. If your sales are not to the $30,000.00, you can take some time to decide whether to proceed to set up the HST tax account.
I hope you find this blog informative. We have assisted individuals to set up businesses whether incorporated companies or registered businesses since 1992. If we can be of any assistance to you, please feel free to reach out to our friendly and knowledgeable staff.
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Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. It is always recommended, when you have legal or accounting questions that you speak to a qualified professional.