When You Register For HST You Have To Start Charging It. Canada 150 Recommendation #47

Tuesday’s= Starting a Business

Once you register for the HST you have to charge it.

Harmonized Sales Tax (HST) is not a two-step process. You do not register and then wait to see if you get to $30,000 in annual sales to start charging the HST. If you have registered to collect HST then you must start charging HST to your customers immediately, based on the date of your registration.

I have seen new business owners who misunderstood this requirement; they thought they had to wait until they achieved $30,000 of taxable sales to start charging tax. Of course, this is a big problem because the business owner has to send HST into the government that they have not actually collected.

The business owner has two choices at this point. They can go back to all of their customers and tell them that there is an additional charge for HST. Some customers will be ok with this approach because they are registered for HST and therefore get HST back, so they do not mind paying it. The other option is to take the HST out of the invoice amount charged to customers. The approach is basically to assume that you included HST in the amount that you charged. You take the HST out of your money. The second option is not ideal for a new business owner because it reduces their profitability.

New business owners have to find good information so they don’t make any mistakes that will cost them money.

No comments yet.

Leave a Reply

Painless Financial Training Group Inc. with Debi Peverill

Understand Financial Stuff, Painlessly