If you're just starting your business, you've likely heard about registering for a GST/HST number. But what is a GST/HST number and when should you get one? This article explains why it may be beneficial to register for a GST/HST number much earlier for your business.
What is a GST/HST number?
A GST/HST number is a unique 9 digit number used by the Canada Revenue Agency to identify your business for tax purposes. It is identical to your Business Number (which is used for corporate income tax filings), however, the last six digits will be different and will relate to the specific GST/HST CRA program (RT0001).
|Business Number||123456789 RC0001||123456789 RC0001||123456789 BC0001|
|GST/HST Number||123456789 RT0001||123456789 RT0001||123456789 RT0001|
When Should You Register?
The Canada Revenue Agency has requirements for when it becomes necessary for your business to register for a GST/HST number. These requirements vary slightly depending on the type of business but for most, it is mandatory to register if your business has a gross yearly revenue in excess of $30,000. So if you're just starting out, it likely will not be mandatory to register. However, for many businesses, it may be beneficial to register and begin charging GST/HST before reaching this threshold.
Why Registering Early Might be Better for Your Business.
The first and perhaps most pertinent reason for a fledgeling business to register early for a GST/HST number relates to monetary considerations. Most businesses will not be an instant success. It will likely take time before your business begins turning a profit. In the interim, you will be faced with the expenses involved in owning and operating a business. These expenses may in fact exceed your revenue and, in such instances, you are eligible to receive a refund for the excess. But you cannot claim this refund unless your business has a GST/HST number registered with the CRA.
Secondly, charging taxes helps to legitimize your business in the eyes of your customers. Generally speaking, people expect to be taxed on their purchases. Even if your startup can still get away without charging GST or HST, larger businesses cannot. In this regard, applying taxes to your sales can make your business appear on par with the major corporations. So if you have grand aspirations, charging GST/HST lets your customer know that you're interested in sticking around for the long haul.
How Do You Register?
Registration can be completed online through the Government of Canada's website. Users of Founded have the ability to apply for a GST/HST number directly through their Founded profile. After you've finished incorporating or onboarding your company, simply navigate to Company Info under the Organization tab. This service is free for users on the Managed Corporation plan.
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