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Registering for GST/HST as beginning free-lancer
Thread poster: Margreet Mohle

Margreet Mohle  Identity Verified
Canada
Local time: 13:21
Member (2010)
French to Dutch
+ ...
Jun 9, 2010

I'm looking into working as a free-lance translator (Still work part-time for an employer).
I found out so far that I don't have to register for GST/HST (because I don't count on getting enough work to make the min. income of 30,000$ the first year), but that I can register voluntarily and in that case claim taxes that I pay on my supplies (I am going to invest in another computer, software, etc.).
I'd like some advice on this. In your experience, would it be worth it? It seems to me it would look more professional to charge GST, and end-clients probably would expect it. What about agencies? What about when working with agencies abroad (I'm native in Dutch, so I will be approaching agencies in Europe, too).

Related to this, if I would not register for tax purposes, do I need to register anywhere else (in Ontario) if I work under my own name? So far I have not been able to find out.

Thank you in advance for your input.

Margreet


 

Germaine  Identity Verified
Canada
Local time: 13:21
English to French
+ ...
Attendez! Jun 9, 2010

Je vais me permettre de répondre en français: attendez aussi longtemps que possible. Bien sûr, c'est avantageux quand vous commencez: le crédit de taxes sur les intrants peut être important. Toutefois, une fois inscrite, vous demeurez inscrite. Vous devez donc produire vos déclarations de taxes à échéance tous les trois mois (ou annuellement) et verser la TPS facturée pendant cette période, que les factures aient été payées ou non!

Par ailleurs, n'y a-t-il pas aussi une taxe de vente provinciale en Ontario? Le cas échéant, il faudra vérifier le seuil d'inscription (qui pourrait être inférieur au seuil relatif à la TPS). Je suis au Québec et je facture TPS+TVQ (sauf à mes clients des autres provinces, auxquels je ne facture que la TPS).

Une recherche rapide avec "Doing business in Ontario" m'apprend que vous pouvez vous inscrire comme entreprise individuelle. Je vous invite à consulter le site du gouvernement de l'Ontario pour en savoir plus.

Bonne chance!


 

Desdemone (X)
Local time: 14:21
French to English
Advantages Jun 9, 2010

If you intend to make translation your full-time employment, I'm pretty sure you'll want to bill over $30,000 annually.icon_smile.gif There are advantages, as you rightly point out, particularly offsetting HST collected with HST paid, and if you're going to be buying equipment, that is definitely a consideration. As well, if you're working at home, you can offset the HST paid on the business portion or your phone bill, utilities and other housing expenses. It's my understanding that Ontario is moving to HST next month, isn't it?

As for the reporting requirement, it's easily done in a few minutes every quarter, particularly if you're using accounting software.


 

Marinus Vesseur  Identity Verified
Canada
Local time: 10:21
English to Dutch
+ ...
Accounting software for Canadian translators? Jun 9, 2010

Hi Margreet

I never bothered with it since I don't have a lot of turnover from Canadian businesses, but if I did, I'd switch to HST in a heartbeat, seeing as most of my clients are businesses themselves.
If you do a lot of translation work for non-business clients, such as people who want their drivers licence translated, the HST would be a fee they may not be keen on paying.
Also, the HST 'forces' you to keep your books in order, but that can be a good thing.

By the way, somebody mentioned accounting software. What is a good program for our line of work?


 

Margreet Mohle  Identity Verified
Canada
Local time: 13:21
Member (2010)
French to Dutch
+ ...
TOPIC STARTER
Thanks / Merci and accounting software Jun 9, 2010

Thank you for your insights. Maybe I'll wait to see where my clients will be coming from, thanks for pointing out the small client factor, Marinus. I do remember that from way back when I did some translations as a student.

Better first *get* some work (since I just found out this afternoon that my old employer has no work in the foreseeable future after my maternity leave is done next month...).

And yes, Paula, we are switching to HST on July 1st; I guess that will make things easier.

I'd also be interested in a good accounting program; I was thinking of getting an accountant, since I don't have any background in it (except for filing taxes, which is simple if you're not self-employed). But if there is a user-friendly program around, I might give that a try.


 

Tom Ellett  Identity Verified
United Kingdom
Local time: 18:21
Swedish to English
+ ...
GST/HST and Ontario business registration Jun 10, 2010

Margreet Mohle wrote:

Related to this, if I would not register for tax purposes, do I need to register anywhere else (in Ontario) if I work under my own name? So far I have not been able to find out.



Hi Margreet,

Regardless of whether you decide to register for GST/HST, you do need to register your business name with the Ontario government if you intend to do business under anything other than your own name – even if you are only appending a word to your name (e.g. Margreet Mohle Translations).

You can register your business online here: http://www.ontario.ca/en/services_for_business/STEL02_039990. Registration costs $60 and is valid for five years.

After Ontario harmonizes its sales tax with the GST from July 1, you'll be able to reclaim the full 13% tax you pay on any business supplies, rather than only the 5% federal GST. If, like me, you work mainly for foreign clients, this will make it even more advantageous to register for GST/HST. Since exports are not subject to GST/HST, you don't have to collect any tax on sales to foreign clients, but you can still reclaim your input HST. So, in my case, I usually end up getting a quarterly refund.

New place of supply rules in effect since May 1 require a business delivering services remotely, such as a freelance translator, to charge Canadian clients the rate of GST/HST applicable in the client's location (rather than the supplier's as previously). So we now have to charge 13% HST to clients in NL, NS and NB, and 5% GST to those in all other provinces/territories. From July 1, 12% HST will apply to clients in BC, 13% HST to clients in ON, and 15% HST to clients in NS.

Believe me, it all looks more complicated on paper than it is in practice!

Good luck!

Tom


 

Margreet Mohle  Identity Verified
Canada
Local time: 13:21
Member (2010)
French to Dutch
+ ...
TOPIC STARTER
It's much clearer now! Jun 11, 2010

Thank you, Tom, for the information, that was very helpful!

Margreet


 

John Fossey  Identity Verified
Canada
Local time: 13:21
Member (2008)
French to English
Accounting software Jun 11, 2010

Marinus Vesseur wrote:

By the way, somebody mentioned accounting software. What is a good program for our line of work?



I use Sage Peachtree, which is actually a bit of overkill - Quickbooks or Simply would probably be just as good.

It took quite a bit of tweaking, though, to get it to work well with invoicing in multiple currencies and (in Quebec) two levels of recoverable taxes, but it does work.


 

Marinus Vesseur  Identity Verified
Canada
Local time: 10:21
English to Dutch
+ ...
HST rules for translators in BC Jun 22, 2010

Tom Ellett wrote:

New place of supply rules in effect since May 1 require a business delivering services remotely, such as a freelance translator, to charge Canadian clients the rate of GST/HST applicable in the client's location ..


BC will also have Place of Supply Rules when the HST sets in, probably on July 1st.

This is the info I have from STIBC

"For those doing business nationally or globally , Canada Revenue has Place of Supply Rules.
- If a BC self-employed translator provides translation services for an Alberta client but performs the translation services in BC and sends the translation over to Alberta, then 12% HST needs to be billed.
- If a BC self-employed translator provides translation services for an Alberta client but travels to Alberta to perform the translation service, then 5% GST applies because Alberta does not have HST.
- Clients in the USA or Europe are not charged HST, just as they are not charged GST."

Thus far I haven't had to deal with it, but the different provincial taxation rules dould give you a major headache if your clients are all over the country. This is worse than Europe! I think I'll sit it out a little longer.


 

Tom Ellett  Identity Verified
United Kingdom
Local time: 18:21
Swedish to English
+ ...
Disagree with STIBC's interpretation Jul 7, 2010

The place of supply rules apply across Canada and not only in those provinces with HST. So, even if you're based in Alberta, which has no provincial sales tax, you now have to charge 13% HST to your Ontario-based clients, for instance.

My reading of the rules is different from STIBC's, as explained in another thread:
http://www.proz.com/forum/business_issues/174661-hst_new_tax_for_canadian_business_owner.html


 

Monica Sandor  Identity Verified
Belgium
Local time: 19:21
English
+ ...
question about 30,000 max income as threshold for HST Oct 26, 2011

I know this is an old string, but I have an added question.

If a translator is based in Canada but translates mainly for clients abroad, I know that one does not charge HST (or GST) to those clients.
If you also have clients in Canada (HST or GST charged, applying place of supply rules) is the threshold of 30,000 turnover annually calculated based on total revenues both from abroad and from Canadian clients, or just HST-taxable revenues?

In other words, say you earn $40,000 from Europe and $5,000 from Canadian clients, do you charge HST to the Canadian clients because your total revenue is 45,000 or not, because your revenue from Canadian clients is only 5,000?

Also, is the 30,000 threshold gross or net (in the CRA documents it says "$30,000 before expenses" - does that mean before deducting expenses, i.e. gross, or before incurring any expenses, i.e. net? Wish bureaucratese was a bit clearer..

Thanks to anyone still following this,

Monica Sandor


 

Marc Rizkallah  Identity Verified
Canada
Local time: 19:21
Member (2010)
English to French
+ ...
As far as I can tell, no - but I'm just guessing Apr 15, 2012

Old thread, but it's tax time and I'm curious about the answer here.

From http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rgstrng/mndtry-eng.html

You have to register for GST/HST when you no longer qualify as a small supplier because your total worldwide taxable supplies of goods and services exceed the small supplier limit of $30,000 in a single calendar quarter or in four consecutive calendar quarters.

Taxable supplies are goods and services that are supplied in the course of a commercial activity and are subject to GST/HST (including zero-rated supplies).

So as far as I can tell, in your example you wouldn't have to charge GST/HST. As for the threshold being gross or net - I have no idea.

Anybody?


 

John Fossey  Identity Verified
Canada
Local time: 13:21
Member (2008)
French to English
Annual taxable sales Apr 16, 2012

The threshold is $30,000 in annual taxable sales. That's a gross figure (invoice subtotal amounts, to which sales tax, if any, would be added) and includes exports of translation services. Under tax rules, exports of professional services (such as translation) are taxable but "zero-rated", meaning the tax rate applied is 0%. So there is no tax to be collected or reported, but they are included in "annual taxable sales".

 

Sarah McDowell  Identity Verified
Canada
Local time: 12:21
Russian to English
+ ...
Canada tax requirements for translation Feb 25, 2014

I'm bringing up this old post because I'm not completely sure about the situation with taxes and freelance translation.

As far as I have heard we don't need to register for GST/HST as long as our total sales does not exceed $30,000. Even if our sales exceed this amount, we never have to charge taxes to clients in foreign countries. But if we have over $30,000 then we have to register for a GST number and charge taxes to clients in Canada? Is this correct?

I was also wondering about gross and net self-employed income for tax purposes. Would the net income on Canadian income tax forms be referring to our income after expenses have been deducted?

If any other translators in Canada have experience with this, I would greatly appreciate any advice!

Sarah


 

John Fossey  Identity Verified
Canada
Local time: 13:21
Member (2008)
French to English
Taxes Feb 25, 2014

Sarah McDowell wrote:

I'm bringing up this old post because I'm not completely sure about the situation with taxes and freelance translation.

As far as I have heard we don't need to register for GST/HST as long as our total sales does not exceed $30,000. Even if our sales exceed this amount, we never have to charge taxes to clients in foreign countries. But if we have over $30,000 then we have to register for a GST number and charge taxes to clients in Canada? Is this correct?


Yes, that's correct.

The different tax rates in each province makes it a bit complicated if you have clients in various provinces, as I do, but you get used to it once you've figured it out. Also, you report your Canadian revenues on your sales tax return, not your export revenues, so I keep to accounts in my software, for revenue from Canadian clients and for foreign clients.

I was also wondering about gross and net self-employed income for tax purposes. Would the net income on Canadian income tax forms be referring to our income after expenses have been deducted?


Yes, that's also correct. You will complete income tax forms with Professional Fees as your revenues and your expenses deducted from them to come up with your net income.

By the way, I use ufile.ca to do my tax return online - it costs something like $25 to do a tax return each year but makes it a breeze, even with professional income. And you can file electronically direct from the secure site.


 
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