As a Young Professional, Should I Register for a GST and QST Number When I Start My New Business?
Starting up a new business in Quebec can be an exciting time. The area is full of opportunity, and you have a chance to make a difference for your community and also make a living doing something you love. But it’s very important that you set your business up the right way from the beginning, so you reduce the chances of running into any problems in the future.
One area where new entrepreneurs often get confused is taxes. They aren’t sure what they need to register for, and they don’t want to leave something out. But in a lot of cases they also aren’t sure if they’re going to meet the requirements of needing to register for things like the Quebec Sales Tax (QST), and the Goods & Service Tax (GST).
No point in registering if you don’t need to, right? But will it be easier to go ahead and register when you start your business, so you don’t have to worry about it later? You don’t want something like taxes to fall through the cracks, because that could be financially dangerous later.
Here’s what you need to know, when it comes to when you should register for the GST and QST.
These Taxes Depend Partially On Business Income
For a side business where you expect to make more than 30K, you will need to register. Consider that carefully, because if you anticipate growth to that level or above you should go ahead and register when you start your business. When you register later you can deduct taxes at that time, if you don’t register when you start your business. It’s just generally easier to handle everything at once for businesses you actively plan to develop. Make sure to register for both the GST and QST numbers.
If you only have a small side business where you don’t plan to make over 30K in a year at any point, you don’t need to register and don’t need to charge GST and QST for the services or goods you provide. But if you register you have to charge these taxes no matter how much you make. In other words, if you make 15K and didn’t register you don’t have to charge tax. But if you make 15K and did register you do have to charge tax, even though your business is under the 30K limit.
Business Structure Matters for Registration
Registering your company as a partnership, sole proprietorship, corporation, or co-operative automatically means you have to register for a GST and QST number, and charge taxes accordingly. These are official business structures that have rules and regulations, so you must treat them professionally. Whether you make a lot of money from them or not, it’s about the way in which you operate an official business, as opposed to a small side business.
One last note: Make sure you understand clearly what income means when filing your income taxes. The money you make from your side business still counts as income, whether you registered and collected taxes or not. Combine the income from that side business with your income from your day job, to get your total taxable income for yearly filing.