10 TALENT: HST FOR THE SELF-EMPLOYED
Welcome to the 10 Talent Blog/Vlog! A bit about myself… I am Sarah Matton, Founder and Director of 10 Talent Management. Over the past decade I have worked professionally in the field of musical theatre. I’m also the Co-Creator of the only temp agency for dance teachers in Canada, Quick Ball Change. I’ve been inspired to start a mini series vlog to share my knowledge as well as speak to those who work professionally in the industry. This is just meant to be an informal chat so we can hopefully all learn something and I hope you enjoy!
YOU CAN WATCH THE FULL VIDEO INTERVIEW AT THE BOTTOM OF THIS BLOG POST!
Today we’re talking about taxes and HST!
I love talking about money, I’ve read a lot of finance books but I’m not an expert. I just like to geek out on financial information. It’s important to talk about HST because people don’t know about it so lets talk about it.
1 | Lets talk about it! What is an HST number?
Harmonized sales tax is a combo of GST & PST so in Ontario we’ve grouped them together and now it’s 13% tax that we pay on goods services and provincial sales tax all combined together. The whole HST thing is basically how much do I collect? How much do I pay out? And the difference of that number is what I owe the government or the government owes me. That’s essentially what HST is.
1a | And it’s different in other provinces right?
It is. So this is Ontario so these are the rules in Ontario, but every province has their own rules. Like Calgary is 5%, and some are worse than us, some are 15%! So we should be grateful?
2 | Who needs an HST number?
OK. So if you are a business, most businesses have them and if you’re self-employed that can apply to you because you are your own business. If we’re self-employed, you are your own business. So you may need an HST number as well.
3 | When do you register for an HST number?
When you are self-employed and you make over $30,000.00 a year. You need to have an HST number. You have to have one. If you don’t make over $30,000.00 a year you don’t need one. You can, there’s some benefits of having one. You can still register whenever you want but once you hit $30,000.00 you have to worry about it, and the onus is on you to know that.
4 | Right. If you make less than $30,000.00 a year, then to register for an HST number would just be pro active?
Honestly, I think it depends on your accountant. Some accountants are like “don’t worry about it,” it’s more drama for them, to do their taxes. You can write off HST so if you buy a MAC lipstick for $20.00, and then it’s $22.60. Then at the end of the year, all the $2.60, all the makeup that we buy, we can put that against the HST that we collect.
So if you have an HST number, you have to collect HST on everything that you bring in. OK so if I register for HST, every performing job, teaching job, judging, workshops, gigging it, any gigging that we do we have to collect HST. So if I make $100/night for a gig, I have to invoice for $113.00 (HST on top of that). If you’re employed and you work at Starbucks on your side gig you’re an employee, you don’t worry about that. It’s only on all the jobs that you find or that your agent finds for you, and side self contracted work; you have to charge HST on top of that.
5 | How do you register for your HST number?
It’s not difficult, just go to the CRA website, you can register for an HST number or register your business. Or you can just call in. I just called in and gave them my information and then they mailed something to me.
6 | So what do you do with the HST you collect? Do you spend it?
Don’t spend it! It’s not your money. You’re basically a piggy bank for the government. So what I like to do, is I have a separate account. And all the HST I collect form my performing, and from my teaching goes into that. OK. And then at the end of the year, when I do my taxes, the government is like “give me my money back.” And you are accountable for that money; you’re kind of just a piggy bank for it.
…OK, so there are bonuses in a sense of when you have an HST number. Lets say for example I collect $3000.00 in HST from all the performing gigs. But I’m buying MAC lipsticks, I’m buying shows, I’m taking dance classes I’m doing lessons. All the HST on all the things that work towards my business, lets say I’ve paid out $2000.00. At the end of the year, I only have to pay them a thousand dollars.
So there are even some instances, don’t get too excited but you would get money back. Let’s say I collect $2000.00 and I pay out $3000.00
6b | You would get a thousand dollars back?
I would. But it almost never happens. I think it’s called an influx tax credit, but it almost never happens so keep all your money in one bank account. Put it in the highest interest savings fund that you can. So you get a couple…literally a couple dollars at the end of the year.
7 | Let’s talk about write-offs and expenses
so the good news is whether you have an HST number or you don’t, because we are self-employed we can write off a lot of things. So our dance classes, the agency commission we pay our agents, you can write it off, and makeup…
7a | Dues, right?
Dues! Absolutely dues. Office supplies, like if you have an office in your home, then you can write off things like that. Gifts, Opening night gifts. You give the Artistic Director a fancy bottle of wine. Thank you please hire me again (laughter)
The only thing is, some accountants get a little picky with it because actors like to drink. So how do you know you didn’t buy yourself that wine? So some accountants like to say please get them a gift card. And then you can kind of prove this was a gift card for this specific …and I’m picky, I write on the receipt, gift for so and so on opening.
8 | Keeping track of all of this stuff. Tell me how you do it, because I’m sure some people have many different ways of doing it.
Yes you have to keep track. So the first thing, I have some props today.
The first thing is if you’re travelling and you have a car, and you’re paying all this gas and car maintenance, you can write it off, but you have to keep very specific track as to where you’re going.
Yeah exactly like $40 bucks I filled the tank, but did you go just to work and home? No.
You have to be picky.
So this is what I do. This is my logbook. I’m getting ready for 2018 because we’re in December right now. And I always have the date, the location, the reason/ the why, and how many kilometers. So I know when I go from my house to the theatre. There and back is 50km. So at the end of the week I know, I doc it. When I do contracts I usually do it at the end of the week because I know exactly how many kilometers. But when I go to a one off teaching job, I usually do it that night. This lives in my car, I fold it up and I put it at the side of my car. I stay very accurate, because they can ask for that and you need it.
My second way is my receipts so like I said you have to be so picky with your receipts. Actually, prop number two.
Prop number two!
OK you’re going to have to forgive me because it’s December! This is so full right now.
Boom! So these are all the things. In the front I have: taxes stuff, so any receipts, like my HST slips.
The official receipts form the god above.
Yes. That’s right. That’s my preset, boom it goes in here. I also have: office supplies, RRSP contributions, gifts, medical, ACTRA or Equity Dues, Parking or 407, Car repair, music and materials for dance teaching, makeup, clothes, food on contract, normal food, eating out on contract.
Yeah, and then I have gas, dogs, because dogs are the most expensive things in my life. And then the biggest one is “me.” So like things I cant write off. And I also like to have a “me column” and keep that, for like LCBO when I do buy myself booze I can prove “no no, this booze was for somebody else, this booze was for me in my “me” column.
9 | I was going to say, do you also need to keep that stuff?
I keep both so I can counter balance and I also want to check out, like “how much did I spend on going out for dinner this year?”
It’s a lot.
It’s a lot usually.
You don’t want to add it up but then you do and it’s like a self-check.
Right. It’s smart
So all these receipts I write little notes, especially going out for coffee, or anything like that, I write out whom I went out for coffee with. It’s like my second thing. So then, at the end of the year, January 1st! If you’re like me…too far
How dare you.
I go through all the things, and then I make myself pretty, and then I add them up and then I put them in an envelope like “Gas”! And I usually put the total on the back and that’s my gas. And then I usually go through every single thing, I usually binge watch a couple Netflix series.
And then I get to watch TV, all the stuff is done, and then when I have all my stuff pretty in a little box for my accountant.
They tell you you’re on the hook for up to 6 years.
You have to keep it for 6 years and people don’t necessarily.
They don’t do that
They don’t know or they just think like frig, I have no space for this, but it’s like get a file folder. Honestly, file folder, $50.00 on Kijiji.
Thank you Kijiji.
10 | Explain how and when to pay your HST
You do your taxes at the end of the year. My accountant is Doug. He’s fabulous. He tells me how much tax I owe and how much HST I owe. You’ll get those little remittance slips in the mail, you bring them into the bank and it will say you owe $2000.00 and you can pay it that way or I like to do it online. I like to go online, and you click, you sign in, your business log in, and then it sync’s right to your online banking, and you can pay it right off the bat. Also if you’re paying a lot more, I think the number is $3000.00, if you’re paying back more than $3000.00, the government can say, ok you’re paying us quarterly. So in which case you have to call the government, and say, “I need more of the remittance slips, and the onus is on you to pay four times a year. It’s again; it’s all like what you pay out and what you can expense. So moral of the story, is make sure you are buying things that are good for you and your business.
Because it’s not only going to make you better as your own businessperson, but it’s going to make you owe less.
Top 10 Takeaways
#1 If you are making over 30,000.00 per year you need an HST number
#2 If you are making less, you can still register but talk to your accountant first.
#3 If you have an HST number you must collect HST on all self employed work.
#4 For an HST number over the phone call the Canada Revenue Agency at 1800-959-5525
#5 Keep HST in a separate account like a high interest savings account.
#6 Keep track of receipts and write down on the receipts what the purchase was made for.
#7 Keep all receipts in an organized file folder so tax season is easy.
#8 You are responsible for keeping receipts for up to 6 years!
#9 Pay HST online or through your bank
#10 For more information visit https:// www.canada.ca/en/services/taxes/gsthst.html