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In just two weeks the HST (Harmonized Sales Tax) will be upon us and we will all have to make some adjustments to how we do business. How smoothly this adjustment will go is all dependant on how ready we make ourselves. 

The HST in the long run going to make collecting and remitting our taxes easier. To get to this harmonized tax state we will have to make some transitions. The first transition will occur on May 1, 2010. This is when the transition rules come into effect. This will be the day we will have to start wondering if we charge GST at 5% or HST at 13%.

Each business must look at what it does and make the decision about which tax to charge.  It all comes down to when does the customer/client take ownership of the goods or services you are selling.  I’ve provided some rough guidelines below on when to charge GST and when to charge HST, but check with your bookkeeper or accountant for advice on how the rules apply to your business.

For the sale of goods or products after May 1, 2010 but before July 1, 2010

• If the customer takes delivery of the goods or product before July 1st then charge GST & PST (if applicable)
• If the customer takes delivery of the goods or product after July 1st then charge HST
• If the customer is paying by installments and does not own the goods or products until all payments have been made then charge GST & PST (if applicable) on all the the payments.

For the sale of goods or products after July 1, 2010

• Charge HST

For the sale of services after May 1, 2010 but before July 1, 2010 when the payment becomes due after the work is done.

• If more than 90% of the service is performed before July 1, 2010 then charge GST
• If more than 90% of the service is performed after July 1, 2010 then charge HST

For the sale of services after May 1, 2010 but before July 1, 2010 when the payment becomes due before the work is done.

• Calculate how much of the work will be done before July 1, 2010 and charge GST on that portion and HST on the balance.

There are special rules are in place for remitting the PST during the transition period and you’ll need to talk to your bookkeeper or accountant regarding the best way to handle the reporting and remitting of this tax to the Minister of Finance.

One final caveat, all of the above applies only to Ontario transactions. If you are dealing with another province or country check with your bookkeeper or accoutant for the answers.

Remember preparation is the best way to make sure your transition to HST is as smooth as possible. Talk to your financial professional and get the advice you need.

Liz Boydell

Halton Organizing and Bookkeeping

Don’t miss the article “Finances Number Crunching” by Liz Boydell of Halton Organizing and Bookkeeping in “Company Magazine” this September.

The article gives a new entrepeneur a general overview of how to set up their companies financial records. It talks about some of the decisions each new entrepeneur will face when creating the process’s for recording their transactions.

“Company Magazine” is published quarterly by Company of Women (a business group connecting women in business.

For more information and helpful bookkeeping tips see our website at haltonorganizingandbookkeeping.com or contact Liz Boydell at 905-630-5348

Profile

My name is Liz Boydell and I am the owner of Halton Organizing and Bookkeeping Services. With over twenty years experience in bookkeeping I can provide you with up-to-date financial records that will enable you to make informed business decisions at a reasonable cost.

Halton Organizing and Bookkeeping can assist you by reducing your workload. My firm provides bookkeeping services to small and medium sized organizations like yours. We can input your expenses and sales data into an appropriate accounting software; produce monthly bank reconciliations; and a trial balance. This information will allow you to know how your business is doing financially. It will also give you a complete package of information to take to your accountant at year end so your taxes can be prepared quickly and with a minimum of effort on your part.

I would like to meet with you to discuss my credentials so you can assess for yourself my experience and how using my company’s services can enhance your business.

Website: www.HaltonOrganizingandBookkeeping.com

2381 Arnold Cres.
Burlington, ON
L7P 4J2
905-634-5348