Do I have to register a BN and HST accout right now?

[okkoppan]

I started my business on Ebay in April, 2012.

Right now, my sales are over $30,000 already, about 10-20% are taxable though.

My questions are,

1, Do I have to register a BN and HST account right now? or I can wait until next March when I file my tax return? Is there any difference?

2, I didn't charge HST or PST/GST during the period. But I still need to remit my HST payments to the government, in this case, I am considered "absorbed" the HST payment in my sales?

My point is, it might sound silly, but I didn't know if my sales would be over $30K, therefore I didn't charge tax then. Do I have to absorb those sales tax now?

If I register a BN and HST account today, does it mean I have to add tax to my items tomorrow?

3, I have a e-commercial website. Besides ebay sales, I also have some paypal sales. At the end of the year, both Ebay and Paypal will send me tax form for me to file my tax return?

4, About the input tax credit. For example, if I bought item A and paid $10 for the HST. Can I claim $10 credit this year even I haven't sold item A this year?

Thanks, everyone!

[pierrelebel]

I strongly suggest you immdiately contact a competent account familiar with your situation and experienced in international mail order for advise.

[pierrelebel]

Not knowing your personal circumstances, I can still answer some of your questions.

Sellers with Cdn$30,000 worldwide annual sales (includes shipping and handling charges) must register with GST/HST and remit the appropriate amount of taxes due minus Input Tax Credits (ITCs).

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html 

Since the bulk (80%-90%) of your sales were exported (taxable at the zero rate), odds are you will have no tax liability once you deduct your ITCs from your purchases and expenses. You may actually get a refund for GST/HST.

ITCs for inventory items are deductable immediately, regardless when the inventory is actually sold and ITCs for acquisition of equipment, furniture or business related expenses are also deductable immediately.

You are responsible to prepare your income tax returns.  Neither PayPal nor eBay will help. You are an independant business. If you have not kept track of your purchases and sales, I most strongly suggest you immediately get help for a competent accountant to help you set up your books.  Your gross sales must be entered on line 162 of your income tax return while your net profit (sales minus costs of goods minus related expenses) must be entered on line 135.

The net profit entered on line 135 is the amount added to your other income (salary, pension, investment, etc) to arrive at your Total Income and evenrtually your taxable income (line 260).

Here is a link to a sample "Profit and Loss" Statement I prepared a few years ago for eBay sellers:

http://www.pierrelebel.com/lists/P&L-sample.htm 

Feel free to adapt it to your needs.

Good Luck.

[okkoppan]

Thanks pierrelebel.

I appreciate your help. Selling on Ebay is actually a fun thing to do. I like the statement you prepared. I will use one like this for sure.

[fatdane]

Although I would contact an accountant first. CRA also has a lot of the information that you want & need. The CRA website is athttp://www.cra-arc.gc.ca/menu-eng.html . If you look at the information on GST, if you started the year as a "small supplier", selling under 30,000 then you have a month from the year end of the year that you break the 30,000 barrier to register. It appears that there is no need to back date thing. There is also a voluntary registration that might be worth while if you are selling a lot outside Canada and buying inside Canada. I think if you read everything at the CRA website about GST/HST all the questions that you asked are answered. The site is written in Government English so it may be necessary to read something several times to get a clear understanding of what they are trying to say. The telephone agents for CRA can be helpful - most of the time. If you call and get one that seems to be confused ask for another agent or a supervisor

One word about accountants - There are many who have no real knowledge of Mail order and online business and may be more confused than you about what you need to do. If you an find other online sellers in your area perhaps they could recommend a good accountant