Tips for Filing your Business HST Return in Ontario
If you’re a small business owner, you might just be getting over filing your year-end tax return. But don’t rest on your laurels for too long: the deadline for quarterly HST/GST returns for businesses with a December 31 year end is at the end of July! You’re required to file and pay your HST return within 30 days of the end of the quarter, so with the end of the previous quarter ticking by on June 30 you’ve got until the end of July to file. Here are some tips for filing your business HST return in Ontario.
Filing HST in Ontario
How often you’re required to file and pay your GST/HST return in Ontario depends on how much revenue your business generates. The full breakdown is available on this page on the CRA website, but here’s the quick version:
If your sales are less than $1.5 million per year then you’re required to file annually;
If your annual sales are between $1.5 million and $6 million then you’re required to file quarterly;
If your sales are more than $6 million then you’re required to file monthly.
These reporting periods are what CRA assigns to you when you first register a GST/HST account and they change as your business sales grow. You can voluntarily file your HST more frequently if you wish, but this is how often you’re required to file.
Calculating, Filing & Paying Your GST/HST
Filing your HST is a multi-step process.
First, you have to invoice your customers for all the goods and services you sold during the reporting period. Next, you have to make sure all invoices from your suppliers for goods and services purchased during the reporting period are entered.
HST is a trust account – your business doesn’t earn the HST it charges, it only collects it on behalf of the Canadian government. The amount of HST that you pay the difference between what you charge your customers and the HST you pay to your suppliers. If you collect more than you have to pay you have to remit the difference to the government but if you pay more than you collect then CRA will send you an HST refund.
CRA is starting to really crack down on late filing and payments, so even if you don’t have the money to pay you should still file. Doing so will at least avoid penalties for late filing. If you don’t have enough money to pay then call CRA and see if you can arrange a payment plan – you’ll probably still incur some penalties but they’ll probably be more lenient than if you just ignore the whole situation.
Managing Your HST Cashflow
Not having enough money in your bank account can be an indicator of financial distress in a business. As mentioned, you’re collecting HST on behalf of the government – it’s not revenue that your business ‘earns’. As such, you shouldn’t rely on the money that you’ve collected on behalf of the government to run your business.
However, because we work with so many small businesses, we know it’s sometimes difficult to separate money that your business has earned from HST it has collected, especially if you’re only required to file annually.
In such cases we recommend setting up a separate business savings bank account. Every time you get paid by a client, put the HST portion of the payment in the savings account. When it comes time to pay your HST, you’ll have the money sitting waiting.
In fact, you’ll probably have too much money because you’re not deducting the amount of GST/HST you’re paying on throughout the reporting period on purchases. Filing and paying your GST/HST will actually boost your cash flow because you can take what you’ve already paid on the invoices you’ve paid and put that money back into your regular business bank account.
Let a Bookkeeper Help!
Are you confused by all of the above or do you cringe at the thought of dealing with your business finances and CRA?
This is where a professional bookkeeper can really help. We deal with this type of thing all the time, and we know how to keep our client’s businesses in full compliance with all things year-end, GST/HST, payroll and more.
You could wrestle with managing your own HST filing and payment, or instead you could hire a part-time bookkeeper and focus on running and growing your business. We think the latter is the smarter move!
HST returns are due at the end of July for some businesses. Catch up on your incoming and outgoing invoices to calculate your HST return amount, then file and pay by the end of the month if you collected more than you paid. Even if you can’t pay the full amount you should still file to avoid late filing penalties, and think about setting up a separate bank account for the HST you collect so you’ll always have enough to pay.
Simply Bookkeeping1 provides professional bookkeeping services for freelancers, solopreneurs and owners of unincorporated and incorporated businesses. We customize our services based on your needs – we only see some of our clients a few hours a month but others we see on a more regular basis. Our services are reasonably priced and we tightly track the amount of time we spend working for you so you only pay for the services you get.
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
Are you dreading having to calculate, file and pay your HST return? What do you do in your business to make this easier? Have you considered getting help from a professional bookkeeper? Leave us a comment and tell us about your experiences. Also, please share this article using the social media share buttons – other people might also be trying to find the best way to manage their HST return and might benefit from our tips.