Do you get intimidated by recording, keeping track of and remitting your HST payments? The good news is that you’re not alone – of the small business owners that we work with on a daily basis, remittances to the federal and provincial governments is always near to top of the things that they dread doing when managing the finances of their businesses and specifically HST remittances.
A Brief Overview of HST
The HST (Harmonized Sales Tax) is a Canadian consumption tax applied when taxable goods or services are sold. It is used in five of the ten provinces where both the GST (Goods and Service Tax) and PST (Provincial Sales Tax) are collected. HST was introduced to Ontario on July 1, 2010, replacing the GST rate of 5% and the PST rate of 8% with a single 13% tax.
It is important to understand that as businesses, we are collecting the HST on behalf of the Canada Revenue Agency. HST is not a form of revenue in our businesses – it is money that you will have to pay to the CRA. Sometimes businesses can run into cash flow problems if they don’t clearly understand how much of the money they have in their bank account is HST owed to the CRA.
Managing Your HST
The single most important thing to do is keep track of how much HST you collect on goods and services that your business sells and how much HST you collect on goods and services your business purchases. Quickbooks allows you to enter the HST amount with each purchase and sale and keeps a running total of how much you have paid and how much you have collected. When it comes to report your HST you can quickly generate a Quickbooks reports that shows you how much you owe or are owed.
How often you have to report file your HST returns depends on your sales and the type of business you manage. For small businesses with annual sales less than $1.5 million you are required to file your HST remittance annually.
While you are only required to remit your HST annually if you’re a small business, you do have the option of filing on a quarterly or monthly basis. We strongly recommend to our clients that they report on a quarterly basis: this allows them to better understand and manage their cash flow and makes sure that they don’t wrongly believe that they have more money available to the business, only to find out that they really don’t when they have to pay their HST remittance.
If you want to switch from an annual remittance to a quarterly one, February 28 is the deadline. If you need help doing this, please contact us straight away!
Let Simply Bookkeeping1 Help …
HST remittances are one of the least favourite things on the to-do lists of the small business owners that we work with. But by carefully tracking the HST that you collect on the products and services that your business sells and on the purchases in makes, by reporting on a regular basis, and by ensuring that you have enough funds available to pay your HST bill without interfering with the operations of your business, you’re well on your way to successfully managing this daunting task!
If you don’t have the time or aren’t sure how to manage your HST, let Simply Bookkeeping1 help! We provide professional bookkeeping services at a reasonable cost and for many of our sole proprietor and small business clients we only need to work a few hours a week to keep their books up to date and in order. To learn more about us, please visit our website at www.simplybookkeeping1.com or contact Michele Hyde by phone at (647) 668 – 9363 or by email at firstname.lastname@example.org.
Have Your Say
We’d love to hear what you have to say about your experiences and best practices for managing the HST for your business. Please leave a comment below or share this article with your family and friends using the social media sharing buttons!