as we start the tax season, i want to write a post about something that i believe is one of the best things that I did for my freelance business – signing up for a gst number.
the government of canada requires a sole proprietor to register for a gst account once “the total revenue from taxable supplies (before expenses) from all of your businesses are $30,000 or more in any single calendar quarter and in the last four consecutive calendar quarters” (click to view the cra info pdf). now, i wish that my freelancing was pulling in that kind of income, and hopefully one day soon it will, but i got my number anyways.
why would i give myself a bit more tax work every year? here are a few reasons:
1) sense of credibility for your business.
in an age where fraud and scams are common place, being registered as a legitimate company adds credibility to your name. whether this order is your 2nd job or your 200th, this is a small act that helps to foster client to freelancer trust.
2) your clients want to see that gst amount on their invoices.
just as we are charged and can claim back gst on the materials and supplies that we purchase for our business, our clients, especially other registered businesses, want to claim back the gst on the invoices that we send out. it’s awkward when your clients ask to see your material costs to judge what they should have been charged for gst. save yourself this embarrassment!
3) you need it to set up a vendors list.
try setting up business accounts with companies like purolator or fedex without one! you will require a number to qualify for business status with most companies you create a purchasing account with.
4) it could end up saving you money.
much like my previous point, a business gst number could put you on preferred client lists for volume orders from vendors. i have noticed that many printing companies, especially in the US which will offer small discounts to clients that prove they are a design company – by showing them your registration number. this means savings for not only you, but you can also pass this bonus onto your clients as well!
vendors also tend to offer special sample packages for re-sellers. this is a fabulous way of showing your clients what you can do for them!
getting my gst number has certainly solved a few headaches for me and my work. i hope that these points help you decide if registering is the right decision for you and your company.