Once a business or self-employed contractor exceeds its small supplier status, they have to collect and pay GST. The amount that is collected and remitted will depend on a few factors. It is essential to keep track of input tax credits and the amount of GST collected. These figures are needed to calculate the amount of GST remitted during the filing period.
If you have your paperwork in order, using the correct method for calculating GST can save time and keep more money in your business. This article will outline some of the best methods for calculating GST remittance.
Traditional Method
For years, many people have calculated their GST payments using the traditional method. The traditional method requires tallying up all input tax credits, and the amount of GST collected and then paying the difference.
This method is ideal for businesses that have a good bookkeeping system in place. However, numbers are often miscalculated, leading to costly errors.
Quick Method
The quick method for calculating GST is suitable for small businesses. Instead of calculating up all of the GST collected and paid over a filing period, a business remits 3.6% of its total revenue, including GST collected.
The quick method of calculating GST provides many benefits. This method requires less administrative work and is easier to ensure accurate payments. However, not all businesses and contractors are eligible for the quick method of filing.
Which Method is Right for My Business?
Finding out the best method to calculate GST will depend on the business. As a general rule of thumb, if you have a large company that must remit yearly, then the traditional method is best. However, if your business is small and you want to file monthly, the quick method may be all you need.
In any case, it’s always good to have a professional opinion. NaickerCPA can assist with GST filings, income taxes, and any other accounting services. We help businesses build value.
If you have any questions about this article or business taxes, in general, or you want to make an appointment with an accounting professional at Naicker & Associates, please contact us at (604) 469-9369. We are based in Port Moody, BC.
