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e-ccounting
October 2007

in this issue

Business Scenario - The GST

Answer

Accounting Tip

Did You Know ?

Definition

Sandy's recommendations

Pass It On !


 

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Welcome to e-ccounting, a monthly newsletter focusing on accounting tips and solutions. accountrain is pleased to offer these resources in response to the needs and requests of our clients, students and readers.

We are often asked the same questions over and over.

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Please forward this to anyone you feel may benefit from some free accounting tips. They'll be glad you did.


  • Business Scenario - this issue - GST
  • One of the most common questions we're asked by new clients and at networking events is - If and when should I register for a GST number?

  • Answer
  • The Canada Revenue Agency's (CRA) answer is as soon as the company has reached $30,000 in sales in a given year, you must apply for a GST number (assuming your industry is not GST exempt).

    It is not always straight forward who is and isn't GST exempt, therefore contact CRA for clarification on your specific industry. If you are still unsure, do not hesitate to call and speak with another agent.

    Once you've received your number, you have it. In other words, if the sales are less than $30,000 the following year, it doesn't matter, you are still responsible to charge and submit the GST on your sales.

    But, remember you receive a rebate on ALL the GST you paid on any business-related purchases. In otherwords, you end up paying the net of the two (the diffference between the GST collected on your sales, less the GST you paid on your purchases.)

  • Accounting Tip
  • Why wait?

    If you're running a business without a GST number, you are advertising that your sales are less than $30,000, in otherwords, you are running a very small business. Is this the image you want to project?

    It is especially to your advantage if you're initial set up costs are high as you will be eligible to claim the GST you paid on all your purchases.

    Remember your clients are already use to paying GST so they won't mind and if they have a GST number, they will get to claim it back anyway.

  • Did You Know ?
  • You can obtain a GST number by phone, it takes 5 minutes, the number is 1-800-959-5525.

    The 9 digit GST number is the same as your business number with RT at the end. (Payroll or source deductions is the same number with RP at the end, and Income Tax with RC and the end.)

    For more Did You Knows?
  • Definition
  • CRA - Canada Revenue Agency

    The Canadian Federal government department has gone through several name changes in the past few years, including CCRA - Canada Customs Revenue Agency and the Receiver General. When making cheques payable to GST (and other remittances) any of these names are accepted.

    For more definitions ...
  • Sandy's recommendations
  • Obtain a GST number as soon as you set up your business.

    Also, understand the bookkeeping for recording both GSTon Sales and Purchases. Learning to maintain your accounting records from the beginning will ensure this aspect of the business is running smoothly.

    Realize there is a short cut method, but investigate the advantages of both before deciding how to account for your GST sales and purchases.

  • Pass It On !
  • Please forward this to anyone you feel may benefit from some free accounting tips. They'll be glad you did.

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