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Posted by Tax Consultants

Small Businesses

Know Which Taxes You Need to Collect

Even the newest, smallest, and home-based businesses have tax obligations. Here you’ll find the basic guidelines to ensure you collect and remit the required taxes for your business in British Columbia.

Harmonized Sales Tax (HST)

The HST is applied on most supplies of goods and services made in British Columbia at a rate of 12%, consisting of the 5% federal portion and a 7% provincial portion. Generally speaking, GST exempt sales will also be HST exempt.

If your business was already registered for the goods and services tax (GST), you would’ve been automatically registered for the new HST. You’re required to collect the HST and to report your HST according to your current GST filing frequency. You can file your HST remittance monthly, quarterly or yearly, and you must file your HST returns electronically. You can investigate the advantages and disadvantages of the filing schedule for your business with your accountant.

For new HST registration, the mandatory registration threshold is $30,000 in gross revenue.

Businesses can claim HST tax input credits for all their business expenses.

You can find a list of what products and services are applicable to HST on the provincial government website.

Federal Tax Requirements

If you’ll be charging the harmonized sales tax (HST), hiring employees, incorporating, or importing or exporting, you’ll need to register for a business number with Canada Revenue Agency (CRA). For more information regarding the different accounts and how to register, Please call us.

The Benefits of HST Registration

Registering for an HST account is optional if your gross annual business revenue is not expected to exceed $30,000. However, registering can provide benefits, including:

  • Tax reduction. If you buy goods and service for your business and you have an HST account, you can apply the HST you paid against the HST you collected, effectively generating a refund.
  • Peace of mind. It’s easy to get caught up in busy day-to-day operations and forget to register for an HST number. If you think you might be close to the mandatory threshold, consider registering right away. Otherwise, when you reach the mandatory limit, your business will be required to pay the HST out of pocket because you cannot charge your clients retroactively.  
  • Pricing strategy. If you have regular, repeat clients and you think your business revenue will reach the mandatory threshold, consider collecting HST from the outset. Otherwise, your clients might protest when their prices go up by the amount of the HST, and ask that you lower your prices to absorb the cost.

Business Expenses 

Don’t pay more tax than you need to. Check CRA’s business expenses page for a list of acceptable business expenses that can be claimed when filing your taxes.

Keep Accurate Business Records

Keep detailed, accurate business records to:

  • Track expenses to spot opportunities for cost savings and identify deductions. 
  • Obtain financing from lending institutions or investors with accurate and up-to-date financials.
  • Comply with tax requirements and be audit-ready.

“Steps to get your own small business grants.

Find government grants for your B.C. small business by calling 1-800-658-9792 to learn about available funding programs and what you need to do to apply. Application deadlines vary among programs, and an important cut-off may be passing this month. Improve your chances by preparing your B.C. small business grant application soon. (Find who’s got B.C. grants in the BC grant recipients section.)