When running a business in the Province, you will need to be aware of the policies and practices associated with the taxes you will incur. This includes income tax, GST and HST, among others. The type of taxes that will apply to you will vary based on the type of business you run. The tax requirements for three of the most common business arrangements are as follows:
- Sole Proprietorship (owned by one person): With this type of business, the sole proprietor is responsible for paying personal income tax on all revenue generated from the business. If your annual taxable revenue is over $30,000, you must register for HST (which is otherwise optional). If operating more than one business, each entity will need to be registered for its own HST.
- Partnership (owned by more than one person): The nature of a partnership means that each partner is responsible for his or her own share of the income/loss in the business. Whether corporate, trust income tax return, or personal, each partner must file a form individually and pay the appropriate taxes.
- Corporation: There are a wide variety of tax arrangements for corporations, varying significantly based on the characteristics of the business. For more information on taxation for a corporation, please visit the Canadian Revenue Agency, as referred to below.
It is also a good idea to familiarize yourself with the following:
- Canadian Revenue Agency (CRA): The Canadian Revenue Agency is the place to find information, documentation, forms, and resources related to taxation. Visit the “Setting up your Business” section of the website to information pertaining specifically to new businesses.
- HST: Harmonized Sales Tax, or HST, refers to the tax applied on almost all goods or services acquired in Nova Scotia. As a business owner, it is mandatory to register for an HST number and charge HST to customers if you sell taxable goods or services with revenues totaling more than $30,000. If operating more than one business, each venture will require its own HST account.
- Tax Credits: Small businesses are eligible for various tax credits, including Nova Scotia New Small Business Tax Deduction, Nova Scotia Equity Tax Credit, Nova Scotia Research and Development Tax Credit among others. Visit Canada Business for more about these credits and what they can amount to.
- In addition to the information provided by the Canadian Revenue Agency, the following resources may be useful in acquiring taxation information for your new business: