If your taxable sales do not exceed $30,000 in a taxation year, GST/HST registration is optional. You will have to decide whether or not to register GST/HST voluntarily. Sometimes, this is not an easy decision to make. Here are some issues to think about.
The advantage of registering GST/HST is that, as a registrant, you will be eligible for input tax credit. This means the GST/HST you were charged on your purchases will be refunded to you. This can be a significant cost saving for your business operation.
If you are selling zero-rated goods and services, there is little doubt that you should register and enjoy the cost savings on the input tax credit.
If you are selling non zero-rated taxable goods and services, registering means you have to start charging GST/HST on sales to your customers. You have to consider how this will affect your business from a competitive point of view. First of all, you need to look at who your major customers are. If your major customers are businesses that would also be GST/HST registrants, they won't care whether you are registered or not because the GST/HST is not a cost to them. Anyway, they can recover the GST/HST you charged. Since registering lowers your operating costs, it may allow you to be more competitive. You can either increase your profits or decrease your prices.
However, if you mainly sell to individual consumers, the GST/HST is an additional costs to your customers. You may lose customers if you become registered and start charging GST/HST. You have to be very careful about this especially if most of your competitors do not charge GST/HST because this may leave you in a competitive disadvantage.
Another issue you need to think about is that the cost saving on input tax credit is different for different businesses. For example, a retail store with major expenses on purchases of merchandises will save much more than a human resource consultant with little purchases. This is also an important factor to consider before you make your decision.
Finally, one of the disadvantages of the GST/HST for you is the extra work or expense to keep track of all the GST/HST that you pay and collect. You have to be compliant with the GST/HST reporting requirements, otherwise, you may get into trouble with the taxman.
