What are the GST and PST Rates for Small Businesses in Canada?
April 26, 2021 | Written by: Sohail Afzal
Being able to create jobs instead of applying for a job is such a privilege to have. You will know this privilege if you own a business or want to own one soon. Entrepreneurs work hard to make it all the way to create jobs rather than acquire one. They have to work extra hours, have to do stuff they have never done before, and push themselves to keep it all together. If you are an entrepreneur, you will come across this crucial financial liability called tax. Since there is no way to run a small business successfully without paying the taxes, here is everything you need to know.
When it comes to taxes for small businesses, Canada has several types and categories, including GST, PST, HST, RST, and QST. The most common questions that new entrepreneurs ask at this point are
- When do I have to sign up for the taxes?
- How do I register for it?
- Which tax category is for what business type?
- What are the GST and PST rates?
That is too much to be worried about all at once. So, we will take you through all the answers one by one, in the simplest way.
When To Register Your Business For GST/HST?
It is crucial to know when to register your business for a GST/HST account. Missing out this detail means a heavy financial penalty from the CRA. Because once your business crosses a certain threshold of $30,000 in four quarters, you have to collect the GST/HST from your customers and remit it to CRA.
How Do You Register For A GST/HST Account?
If your business crosses the threshold and your books are not properly maintained, you can get in trouble. Hiring a professional bookkeeping firm for keeping the records of your business revenue will help you in this regard. Once your books are maintained and you know that your business revenue is there, you can easily register for a GST/HST account online.
You don’t have to wait to cross the threshold of $30,000 before you register. You can make an early registration at any point in time. This early registration can benefit you from Input Tax Credits from business expenses.
Which Tax Category Is For Whom?
So far, we have talked about GST and HST. These taxes apply only to the businesses that operate in the territories and provinces of Canada that charge GST or HST. If your business serves one of the following provinces, there will be provincial taxes.
- British Columbia and Saskatchewan charge PST (Provincial Sales Tax)
- Manitoba charges RST (Retail Sales Tax)
- Quebec has its own provincial tax system known as QST (Quebec Sales Tax)
What Are The Tax Rates?
The tax rates, including all provincial, federal, goods and sales, retail, and other taxes, are different for different provinces and territories in Canada. Quebec and Alberta, however, have their separate rates, which can also be found here along with all the other tax rates. If you cannot get your head around these tax rates, it is best to hire a professional accounting firm. By doing so, you can deal with all the taxes like a professional entrepreneur.
It is essential to keep yourself educated on all the tax rates and other financial responsibilities and liabilities. But it doesn’t mean that you have to get involved in the entire process. You have more important things to do for your business than keeping the books. Remember that you can save your time, money, and energy by taking professional assistance in this regard.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.