Last Tuesday (August 7th) I was invited to be on Tommy Schnurmacher ‘s weekly finance segment on CJAD. The topic of discussion was “Everything you wanted to know about small business but were afraid to ask”. It was a lot of fun and although I did not get to cover everything that you would want to know about small business in the 17 minutes that we were on the air, we were able to present some useful information to potential small business owners and fielded a few interesting questions. Below is a recording of the interview followed by a brief discussion of the points covered and relevant links:
How to Register your Small Business
Registering your small business is a fairly straightforward process.
Do you have to register for GST-QST?
Almost all small businesses that provide goods and services in Quebec (with a few exceptions) are required to register and charge GST-QST unless they qualify as a small supplier i.e. their gross revenues (sales) over 4 calendar quarters is $30,000. One caller noted that a small business is personally liable to remit the GST-QST to the government. This is absolutely correct as small businesses that are registered for GST-QST are essentially agents of Revenue Quebec. In other words any GST-QST that you collect, is on behalf of the government and should be maintained in a separate account (it is not yours to spend!) until you are required to remit it.
Can you remit a lower amount of GST-QST?
During the show Tommy had thought that it was possible that businesses registered for GST-QST would be able to remit less than the amount collected. I didn’t quite make the connection at the time, however he was actually referring to the Quick Method of GST-QST which does in fact allow business owners to remit less than the full amount of the GST-QST based on a specific formula. This assumes a fixed amount of input tax credits i.e. taxes paid on expenses incurred by the business.
Is your business idea marketable?
Any potential business owner, whether you are selling cupcakes or IT services, should research their business idea and ensure that it is viable prior to quitting their job or making substantial changes to their lifestyle. Most new ventures can take up to a couple of years to really start being profitable and as such it is important to have adequate funds saved up to support yourself and lifestyle.
One caller noted that business rental agreements often have fees that are not immediately apparent. Once again, business owners should exercise common sense and be intimately familiar with any contracts that they are signing.
Should you incorporate your business?
The decision to incorporate is one that should certainly be considered when starting any business. Generally if you are small and you do not anticipate major liability issues, incorporation is not necessary. However as the business grows, there are certain tax deferral opportunities that are available, among other advantages of incorporation.
It was a thrill to be on the show and I’d like to thank Chris Pare, Producer for contacting me and Tommy for being a patient and intuitive interviewer.
Ronika Khanna is a professional accountant in Montreal who helps small businesses achieve their financial goals. Sign up to receive articles pertaining to small business, accounting, tax and other occasional non business topics of interest. You can also follow her on Facebook or Twitter.