The Quick Method of GST/HST Calculation in QuickBooks is an alternative way for small businesses to calculate their GST/HST remittances. It simplifies the calculation process by using a predetermined percentage of sales instead of tracking and claiming input tax credits (ITCs) on every purchase. In this article, we’ll cover everything you need to know about the Quick Method and how it can benefit your business.
How does the Quick Method Work?
Under the Quick Method, businesses that offer services charge their customers GST/HST based on a predetermined percentage of their sales, depending on their province or territory. These percentages are set by the Canada Revenue Agency (CRA) and are lower than the regular GST/HST rate to compensate for the fact that businesses cannot claim Input Tax Credits (ITCs).
For example, in Ontario, the Quick Method rate for GST is 8.8%. If a business had $100,000 in sales during a reporting period, they would still charge their customers the regular rate of 13% HST, which amounts to $13,000. However, when it comes to remitting the GST/HST to the CRA, the business would only have to remit 8.8% of the $100,000, which amounts to $8,800. This gives them a reduction of 4.2% ($13,000 – $8,800 = $4,200) compared to the regular method of GST/HST calculation.
It’s important to note that the percentages and rules vary depending on the type of business and location. It’s best to consult with a tax professional or refer to the CRA guidelines to determine if the Quick Method is applicable to your business.
Benefits of the Quick Method
The Quick Method can benefit small businesses in a number of ways. First and foremost, it simplifies the calculation process, making it easier for businesses to manage their accounting. Since businesses do not need to track and claim ITCs on every purchase, they can save time and reduce the risk of errors.
In addition, the Quick Method can also help businesses save money. Since the Quick Method rates are lower than the regular GST/HST rates, businesses can charge their customers less while still remitting the same amount to the CRA. This can make their products or services more competitive in the marketplace.
How to Qualify for the Quick Method
To qualify for the Quick Method, a business must have annual taxable sales of $400,000 or less, excluding GST/HST. Certain types of businesses, such as accounting and tax firm, banks , contractors, are not eligible for the Quick Method.
How to use the Quick Method in Quickbooks
While QuickBooks is a great tool for managing your finances and taxes, there is no direct way to activate the Quick Method of GST/HST calculation in QuickBooks. Instead, it requires a manual process that can be confusing for some small business owners. However, with the help of an experienced tax professional like Inspiretax, you can ensure that you are using the Quick Method correctly and taking full advantage of its benefits.
Conclusion |
The Quick Method of GST/HST Calculation in QuickBooks is a simple and effective way for small businesses to save time, reduce errors, and potentially save money. Contact Inspiretax for expert guidance on setting up your QuickBooks account and taking full advantage of this tax-saving opportunity. Our experienced team can help you navigate the process and maximize your tax savings.
