H.S.T Question

[Broker101]

Hi Guys,
I appreciate the knowledge sharing and time you take out to help others on this forum.

We are planning on starting up our freight brokerage. Just have some questions:

1) We are based in Ontario - is registration in Quebec also required? (we may have some loads to and from Quebec). What have the other brokers done that are in Ontario?R eferring to the registration/licensing requirements for freight brokers in QC through the CTQ. Do most ON based brokers register with the CTQ?

2)I understand its important to get the US licence, for any loads of US origin.

3)The confusing part for me is the H.S.T - I understand that any loads that are beyond CDN borders are zero taxed. Those loads that are in Canada are taxed based on the province of delivery- right? When we are invoicing our shippers how do we charge the H.S.T Could someone break it down for me on how they do it? HST is charged only on the portion of our omission right?

4) In your opinion what is the best way to register the business? We are 2 partners- partnership or corporation?

Thanks,

 

[markhamboy]

This should help.

https://www.canada.ca/en/revenue-ag...hst-information-freight-carriers.html#findout

 

[loaders]

1) Not that I am aware of. HST is a Federal requirement.
2) Yes, register with FMCSA if you will be doing any cross border shipments. Either originating in, or destined for the US.
3) Yes, the HST is charged at the rate applicable in the Province of destination. HST should be charged to your shippers at the applicable rate. Why would you be "charging" your carriers? They would submit invoices for the loads they haul to you with no HST included. Your last question makes no sense to me. Your commission, or profit, is the difference between what you pay your carrier and what you charge your customer. It should always remain an internal issue and not subject to HST. You will have to be a bit more specific to receive the proper answer.

 

[Broker101]

1) Not that I am aware of. HST is a Federal requirement.
2) Yes, register with FMCSA if you will be doing any cross border shipments. Either originating in, or destined for the US.
3) Yes, the HST is charged at the rate applicable in the Province of destination. HST should be charged to your shippers at the applicable rate. Why would you be "charging" your carriers? They would submit invoices for the loads they haul to you with no HST included. Your last question makes no sense to me. Your commission, or profit, is the difference between what you pay your carrier and what you charge your customer. It should always remain an internal issue and not subject to HST. You will have to be a bit more specific to receive the proper answer.

Thanks for the response.

for question #1 I was not specific enough, sorry about that - I was referring to the registration/licensing requirements for freight brokers in QC through the CTQ. Do most ON based brokers register with the CTQ?

The tax explanation makes sense - we charge the shipper HST (which goes to the gov't) and then proceed to pay the carrier for their services.

 

[thebluffs1]

Just what the world needs....another broker without any idea of legislative or financial implications.
Yes that was sarcastic, but don't let my old man's cynicism get in the way of you guys chasing your dream.
Best of luck with the new venture.

 

[loaders]

I used to register with CTQ, but haven't for the last number of years. If memory serves me, it is not required.
Yes, you charge your customers HST and pay that to the government.....less any HST you have paid out for purchases related to your business. i.e. office expenses, gas for company cars, promotional items, etc.

 

[TransAction]

I'll answer #4 for you since nobody has. I have had several bad experiences with business partnerships. They are very similar to marriage, where you go in all excited seeing the relationship as rainbows and butterflies until the real world kicks in and then peoples real personalities come out. All I can tell you is to incorporate and spend some money on some solid shareholders agreements. Get a lawyer whom knows the ins and outs and what could occur and how to resolve any differences. Specially if you are 50%-50%. My lawyer is great, and covered such things as "what if Jeff ends up in a wheelchair and cannot contribute to the working business" . I know this sounds kind of morbid and what people don't want to discuss but its ultra important once your making $$$. That is a really bad case scenario of course but these are the things you may not think of when in the "honeymoon" stage of your business relationship. Best of luck and congrats!

 

[loaders]

Looks like question 4 appeared after an edit to the original post. Yes, without a doubt, incorporate your business and as suggested, employ the services of a good lawyer. A well written shareholder agreement will serve you well, in good times and when things go bad (hopefully never).