Figuring out GST was probably not on the top list of things you were most excited about whenever you were starting your own business. But the reality is, if you’re going to run a company in Canada you are going to have to collect and remit GST. So what we’ve put together on our website is a free resource, a free quiz, that you can go through and learn the most common misconceptions. If you navigate to financelearninglab.com and under the Free Resources tab you will find the GST Tax Postcard Quiz. It’ll help you debunk a few of the myths people end up having. So, where and how can you find more information on GST? Go to Google and type in “get” in the search bar. The first result that will appear is the Canadian Government GST website. So this is where you will be navigating to register for GST and to handle the different elements of GST.
The particular item I want to discuss today is that it is human nature as a small business owner to delay registration for GST as long as you can. And that makes sense because you feel like there’s a million other things you have to do and the last thing you want to deal with is GST until you absolutely have to. And so the particular myth I want to debunk is that waiting as long as you can to register for GST is actually not in your own best interest. When you register earlier as a GST registrant in Canada, what it allows you to do is all the costs you’re incurring for your business, you are actually able to get an equivalent of a refund or money back associated with the GST you’re spending on your business. So if you think about it initially when you’re starting up a company, you’re spending all kinds of money associated with actually getting your business up and running, all these start-up costs. And all these start-up costs you’re buying, you’re paying GST to all these different vendors and suppliers.
The 30k threshold means whenever you’ve actually earned enough in sales, that you’re legally required to charge GST. You can wait until that threshold to actually be a GST registrant. But the really cool thing is if you register for GST before hitting that 30k threshold, what you’re able to do is actually get back the money you spent on start-up costs. So I’ve seen this with different companies where they’re able to get back $1000 in cash or an actual cheque that they’re going to send to you to say, “Here’s the money you spent in GST. You can get that back”. And this can help you grow your business. So whenever you’re in that early stage and a $100 cheque or $1000 cheque can make a difference, you can actually recoup that from your start-up costs.