The Financial Dilemma Facing Health Professionals

Launching a new business as a health professional in Canada is something to celebrate. You’re on your way to future success and financial freedom. Yet, why do so many new health professionals land up in a financial dilemma?

Many are unsure of when, why and how to register for GST/HST and what happens after that. Today, we’re going to explore the benefits of GST/GST registration for your business.

If you have passed the Small Supplier Threshold (meaning you earn more than $30,000 per per four consecutive calendar quarters (not just a calendar year the quarters start anytime), it’s time to register for GST/HST. This process is actually easier than you think, and our financial experts at Tyagi Group are here to assist.

Before we dive into how GST/HST registration can boost your cash flow, we recommend that you click on this FREE guide to early GST/HST registration for health professionals, which will give you the building blocks you need to take your business further.

Problem Exposed: "Not Sure If I'm Making Money"

The number one problem that pops up among health professionals is that they are not sure if they are profitable enough. This could prevent you from GST/HST registration and non-compliance, or failure to file returns could lead to larger problems down the line. It’s advisable to speak to a registered CPA from Tyagi Group to help you break through your financial uncertainty and turn your profitability doubts into booming cash flow!

The Solution: The Financial Advantages of GST/HST Registration

GST/HST registration has many benefits, one of them being added financial clarity. This form of tax allows you to charge your customers a percentage for GST/HST, which you can use for business expenses. You will then have to record your collections, report and remit them to the CRA, and you could even qualify for a refund if you’ve spent more on sales tax than you collected.

The Financial Benefits of GST/HST Registration in a Nutshell

Maintaining accurate records for reporting purposes gives you financial clarity.
Enjoy improved cash flow.
Claim ITCs for what you pay on business expenses.
Avoid spending more than you’re making.

Different Filing Options: Holding onto More Money with GST/HST Registration

The good news for health practitioners wanting to retain more money is that there are different filing options that help you do this after you are registered for GST/HST.

With the Regular Method, you report your actual GST/HST collected and actual GST/HST spent on purchases. Since the amount paid on purchases is deducted from the amount collected at 100%, you may not end up paying all the GST/HST you collect.

The Quick Method is useful for small businesses, as it is based on a rate multiplied by your taxable sales. If you don’t have a lot of expenses, you can save money using this method because your remittance rate will be lower than the rate for GST/HST collected.

The third option is the Simple Method, which eliminates the need to declare your GST/HST paid separately in your financial books. This method has the highest tax payable but is the simplest to maintain books and records.
Read more about the different filing options in this blog.

Understanding the Numbers: Paying 8.8% Instead of 13%

In Ontario, the GST/HST charge is 13%. But did you know you can score huge tax savings and pay only 8.8% in remittance instead? The Quick Method rate in Ontario is calculated at 8.8 % and is a great option for those who don’t claim a lot of Input Tax Credits (ITCs).

So, for example, if you are a massage therapist in Ontario and charge $100 for a massage, the total you charge your client with GST/HST (13%) would be $113. Using the Regular Method for filing, you would pay the entire $13 to the CRA. With the Quick Method, you multiply the total amount charged by 8.8%.

$113 x 8.8% = $9.94

This means you save $3!

When you apply this to all your clients each month, you pay significantly lower tax rates and can enjoy greater tax savings.

Expense Management: Getting Your Money Back through GST/HST

By registering your business for GST/HST, you will also be eligible to claim money back when you purchase from another GST/HST-registered supplier. For example, if you buy a printer for your office and pay a value-added tax, you can claim this back. Getting money back from zero-rated supplies can also help you as a business owner.

Certain health supplies and services are zero-rated, meaning that customers pay 0% GST/HST, but this also has a benefit for you. With careful expense management, you can claim back the money you spent on those zero-rated products or services and reduce your costs.

Learn more about zero-rated sales tax here.

Stories of Success Through GST/HST Registration

Our client testimonials are brimming with HST/GST registration success stories. Some of the health professionals we help are new business owners who have not yet registered. Others are already registered but don’t know their different filing options and how it can save them money.

One of our client testimonials came from Patricia, who did not know a lot about HST/GST registration and filing. After consulting with Tyagi Group, they were able to understand the process in simpler terms and realized the importance of how this simple step could transform her business profitability. They now feels more confident and prepared when filing their GST/HST, as they can refer back to our downloadable resources and is able to see the long-term benefits of being tax-compliant.

The Impact of GST/HST Registration on Profitability

GST/HST registration can be tricky to understand. However, don’t make the mistake of putting this off purely because of it. Give your health practice the sustainable future it deserves and achieve higher levels profitability through GST/HST registration. Tyagi Group is here to guide you every step of the way.

Here’s what we’ve shared in this blog:

There are different filing options that can help you retain money.
GST/HST registration gives you financial clarity and boosts cash flow.
Use the Quick Method to pay 8.8% instead of 13%.
GST/HST registration has real benefits for expense management and tax savings.

Eradicate any frustrations of trying to understand GST/HST on your own. Our Business Foundations GST/HST is a mini course for Canadian health professionals with everything you need to know about GST/HST as a health business owner, so you can manage your sales tax requirements like a pro and save money while you’re at it!