Thursday, April 15, 2010

A Tip For New Self-Employed Folks: Use The Quick Method For GST

Looking at my GST return this week, I realized that I'd have saved some cash if I'd elected to use the Quick Method for calculating how much to remit. Unfortunately, it's something that you have to file a form for, well ahead of when you actually plan to start using it, meaning that the best I can do now is elect to use the Quick Method beginning in 2011.

For any entrepreneurs out there who are starting up their own business and expect to be collecting GST (as I've done on each of my consultation contracts), it's essentially "free money" if you use the Quick Method rather than its alternative, the Input Tax Credits (ITCs). With the latter approach, you can reduce how much of the collected GST you actually remit by itemizing expenses of yours and deducting any GST you paid on them from the amount you collected. In my case, that added up to less than $100 of savings. If I'd been able to use the Quick Method instead, I'd have gotten to keep about twice that amount from the GST I brought in. In Vicki's case, having made a lot more in 2009 than I did, it makes an even bigger difference (fortunately, she filed the Quick Method election form for her company years ago).

If all of this is goobledygook: just remember to look up the GST Quick Method online if you happen to start up your own business. You'll thank me later!

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