When do you have to apply?
GST is optional as long as your gross revenue (that is your income before expenses) in a single calendar quarter (three months) or in four consecutive calendar quarters (one year) is less than $30,000.00. As soon as your revenue exceeds that amount you owe GST whether you apply or not. You have 29 days after reaching $30,000.00 to apply with the government to avoid any penalties or interest.
There are a couple of thoughts on when you should apply for GST.
- Your gross revenue is based upon what has been invoiced during the period and not what has been collected.
- Sole proprietors owning more than one business must combine the income from all businesses when determining whether they have reached $30,000 in sales.
- If you are a public service organization, like a charity, you do not have to register until revenues reach $50,000.00.
- One of the biggest mistakes that business owner's make is thinking that GST is cash flow in your pocket. The GST you collect on your invoices belongs to the government and should always be put aside when invoices are paid until you are due to make your payment. A separate bank account to store money owing to the government can be a useful tool.
- If you are a business that does not have a lot of expenses, but you qualify for GST, you may want to find out more about the quick method of reporting your GST. Businesses in the service industry are more likely to find themselves in this position.
GST is a big topic and could take pages and pages to go over. If you want to see what the government has to say on GST clink on this posts title and it will take you to Revenue Canada's GST page.