If you’re starting a business in Canada, you’ve probably heard about the need to register for a GST/HST number with the Canada Revenue Agency (CRA). But when is the right time to apply — and is it always in your best interest to do it right away?
Let’s break it down.
You must register for a GST/HST number if:
• Your business earns more than $30,000 in taxable revenue in:
• A single calendar quarter, or
• Over the last four consecutive calendar quarters (rolling 12-month period)
At that point, you’re no longer considered a “small supplier” by the CRA, and you have 30 days to register.
Some businesses choose to register voluntarily before reaching the $30,000 threshold. Here’s why:
• Input Tax Credits (ITCs): You can recover GST/HST paid on eligible business expenses (equipment, software, supplies, etc.)
• Professional Image: Some clients (especially other businesses) prefer or expect you to charge HST — it signals you’re an established business.
• Future-Proofing: If you’re expecting growth, registering early avoids the risk of a surprise tax bill later.
Why You Might Want to Wait
While voluntary registration can be helpful, it’s not always the right move, especially for new or small businesses:
• Administrative Burden: Once registered, you’re responsible for charging, collecting, and remitting GST/HST, even if you’re earning very little.
• Cash Flow Impact: You may collect GST/HST on sales and owe it to the CRA before you’ve received payment from clients.
• More Complexity: You’ll need to file regular GST/HST returns (monthly, quarterly, or annually), and possibly adjust your accounting process.
If you’re just starting out, working with individuals, or not incurring a lot of expenses, it may make sense to wait until you’re required to register.
But if you’re investing heavily in your business or selling to other businesses who can claim the tax back, early registration might benefit you.
Wait to register until you hit $30,000 unless you’re spending a lot upfront or want the ITC and credibility benefits early on.
Want help deciding what’s right for your business? Reach out — we’d be happy to walk you through it.