Streamlining Your HST Filing Process in Ontario: The Importance of Hiring an Outsourced Bookkeeper for Small Businesses

For small businesses operating in Ontario, filing HST (Harmonized Sales Tax) can be a daunting task, especially for those new to the process. Despite the challenges, it is a legal requirement for businesses with an annual taxable revenue exceeding $30,000. In this blog post, we will explore the process of HST filing in Ontario, potential challenges small businesses may encounter, and the pitfalls of not filing on time or at all.

The HST filing process in Ontario involves several steps that small business owners need to follow to ensure compliance with the Canada Revenue Agency (CRA) regulations. Here is an overview of the HST filing process:

The first step in the HST filing process is to register for an HST account with the CRA. Businesses with an annual taxable revenue exceeding $30,000 are required to register for an HST account.

Once registered, you collect HST on eligible sales. The HST rate in Ontario is 13%, which includes a federal component of 5% and a provincial component of 8%. Businesses must ensure that the HST collected is accurately recorded and remitted to the CRA.

As a rule, businesses must maintain detailed records of all HST-related activities for a period of six years. This includes invoices, receipts, and other documentation related to HST transactions. The CRA may perform random audits of HST returns, and you must be able to provide accurate records upon request.

Ensure that you submit regular HST returns to the CRA. The frequency of HST returns depends on the size of the business and the amount of HST collected. Small businesses may file HST returns monthly, quarterly, or annually and ensure that HST returns are filed accurately and on time to avoid penalties and interest charges.

Finally, you remit the HST collected to the CRA, which can be done online. You must ensure that the correct amount of HST is remitted to the CRA and that remittances are made on time.

Challenges of HST Filing for Small Businesses

One of the major challenges faced by small businesses when it comes to HST filing is keeping accurate records of all HST transactions. The Canada Revenue Agency (CRA) requires businesses to maintain detailed records of all HST-related activities for a period of six years. This can be a time-consuming and challenging task for small businesses, especially those with limited resources.

The accuracy of HST records is critical in ensuring that businesses collect and remit the correct amount of HST. Any errors in recording HST transactions can result in the under-reporting or over-reporting of HST collected, leading to incorrect HST remittances, which can lead to potential penalties and interest charges from the CRA.

Another challenge in keeping accurate records is the volume of data involved. Small businesses may have to deal with hundreds or thousands of transactions each month, making it challenging to keep track of each transaction's HST implications. Moreover, businesses may have to deal with complex transactions that may impact the collection of HST, making it challenging to ensure that each transaction is recorded accurately.

To overcome the challenge of keeping accurate records, small businesses can implement robust record-keeping systems and processes. This may involve investing in bookkeeping software or hiring a professional bookkeeper who can manage HST records and ensure compliance with CRA regulations. By keeping accurate records, small businesses can avoid penalties, interest charges, and legal action and maintain their reputation as responsible and compliant taxpayers.

Bringing in Outside Help

Hiring an outsourced bookkeeper to track and file small business HST can bring numerous benefits to small business owners such as:

Accurate Record Keeping

One of the primary benefits of outsourcing bookkeeping services is accurate record keeping. Professional bookkeepers have the skills and expertise to accurately track and record HST-related transactions. They ensure that all HST transactions are recorded accurately, and the books are up-to-date.

Timely HST Filing

Hiring an outsourced bookkeeper can help ensure that HST returns are filed on time. Bookkeepers are responsible for tracking the HST filing deadlines and ensuring that returns are submitted on time to avoid penalties and interest charges.

Avoiding Penalties

Outsourcing bookkeeping services can help small businesses avoid penalties and interest charges. Professional bookkeepers are knowledgeable about the CRA regulations and can ensure that HST returns are filed accurately and on time, minimizing the risk of penalties and interest charges.

Saving Time

Bookkeeping is a time-consuming task that can take valuable time away from running a small business. Outsourcing bookkeeping services can free up time for small business owners to focus on core business activities such as marketing, sales, and customer service.

Cost Savings

Outsourcing bookkeeping services can be cost-effective for small businesses. Hiring a full-time in-house bookkeeper can be expensive for small businesses, especially those with limited resources. Outsourcing bookkeeping services can help small businesses save money on overhead costs and reduce the need for additional office space and equipment.

Business Insights

Professional bookkeepers can provide valuable insights into a small business's financial health. They can generate reports that provide information on revenue, expenses, cash flow, and other key financial metrics that can help small business owners make informed decisions.

Filing HST returns in Ontario can be a challenging task for small businesses, but it is a legal requirement that must be met. Failing to comply with HST regulations can have severe consequences, including penalties and legal action. However, outsourcing your bookkeeping to a professional can help simplify the HST filing process and ensure compliance, providing you with valuable insights into your business's financial health. By partnering with an outsourced bookkeeper, you can focus on running your business while ensuring that your HST returns are filed accurately and on time.