Why register for HST / GST?

In deciding whether or not to register for the HST, the general rule is, "The HST is good for business". Compare the two scenarios below to see why business supports the HST.


Impact of HST on Net Income (Business)

 Net income is higher if a business is registered for HST.

Do you pay HST on anything? That amount is an Input Tax Credit if you register, & is deducted from the HST you collect from your clients. If you don't register, the HST you pay out is an expense to your business, reducing your net income.

From another angle - for registrants, net income increases by the amount of HST paid out. Buying a truck? All the HST will come back to your business!

Bonus for start-ups: if your "HST paid out" is more than the "HST collected", Canada Revenue Agency will send you a cheque for the difference.

Making money may not be the reason you went into business, but how to maximize your revenue & minimize your expenses (improve your bottom line) is still important. The HST does that (at the expense of your non-business customers, who are rightfully outraged).

However, customers are complex. You also need to consider that they expect to pay HST on your services and will question your professionalism if you don't charge it.

You are in business for the long haul, so you may as well start off in the right direction (towards running a successful business). Get a Business Number.
The form is RC1 at http://www.cra-arc.gc.ca/E/pbg/tf/rc1/rc1-09e.pdf. You will need to have the following info:

* Social insurance number (SIN)
* Business structure - sole proprietorship, partnership, or incorporation
* Name
* Location - business addresses
* Business activities
* Representative/contact person - your name (or me, if I am to be your bookkeeper - yes, I would be happy to discuss this with you).
* Obligations - no idea what this refers to
* Sales amount / reporting period - Estimate your sales
* Fiscal year-end - Dec 31 for sole proprietorships & partnerships
* Effective date - can be back dated in this fiscal year
* Accounting periods - you can choose to report monthly, quarterly, or annually
* Records - I couldn't find a reference on the form to records. If you do, fill it out.

The form is 5 pages long, but a lot of it doesn't apply to your business. Let me know if you have any questions or concerns.