How to Incorporate GST/QST into Your Business Plan (For Startups) — Montreal CPA Firm Near You

Introduction
For startups in Quebec, integrating GST (Goods and Services Tax) and QST (Quebec Sales Tax) into your business plan is not just about compliance it’s about financial strategy. From day one, how you price your products, structure your cash flow, and track your taxes will determine your company’s long-term stability.

At Mackisen CPA Montreal, we help startups design business plans that are both compliant and profitable. This guide explains how to incorporate GST/QST considerations into your startup’s pricing, cash flow forecasts, and operational planning, ensuring your business starts on a solid fiscal foundation.

Legal and Regulatory Framework
All startups carrying on commercial activities in Canada and Quebec are governed by:

• Excise Tax Act (Canada) s.240(1) — requires GST registration once taxable revenues exceed $30,000 in a 12-month period.

• Taxation Act (Quebec) s.407(1) — requires QST registration under the same $30,000 threshold for businesses operating in Quebec.

• Tax Administration Act (Quebec) s.59(3) — imposes penalties and daily compounded interest on unpaid or late remittances.

• Revenu Québec Administrative Policies (TVQ.206 series) — detail registration, filing, and Input Tax Refund (ITR) eligibility requirements.

Startups must anticipate GST/QST registration and integrate these obligations into their financial model, pricing, and cash flow assumptions.

1. Identify When Your Startup Must Register for GST and QST

You are required to register for both GST and QST if:

• Your total taxable revenues exceed $30,000 in the past four consecutive quarters.

• You carry on commercial activities in Quebec or sell taxable goods/services to Quebec residents.

You may also choose voluntary registration before reaching $30,000 if you:

• Want to claim Input Tax Credits (ITCs) and Input Tax Refunds (ITRs) on startup expenses (rent, equipment, professional fees).

• Plan to grow rapidly and exceed the threshold soon.

Mackisen Tip: Most serious startups benefit from registering early to recover taxes on their initial investments.

2. Include GST/QST in Your Pricing Strategy

Pricing must balance competitiveness with tax compliance.

A. Tax-Exclusive Pricing (Most Common for B2B Startups):

• Your price excludes taxes, which are added at checkout.

• Example:

  • Base Price: $1,000

  • GST (5%): $50

  • QST (9.975%): $104.74

  • Total: $1,154.74

B. Tax-Inclusive Pricing (Common for Retail or B2C Startups):

• Your displayed price includes all taxes.

• Example:

  • Total price: $1,154.74

  • Base price (before taxes): $1,000

In your business plan, specify whether prices are tax-inclusive or tax-exclusive. Ensure your POS and invoicing systems calculate taxes correctly and display your GST and QST registration numbers.

3. Build Tax Compliance Into Your Cash Flow Forecasts

GST/QST collected from customers is not business income it must be remitted to CRA and Revenu Québec. To prevent cash flow shortages:

• Allocate collected taxes to a separate “Tax Holding Account.”

• Forecast quarterly remittances in your cash flow projections.

• Reconcile GST/QST monthly to track what’s owed.

Example Cash Flow Projection Segment:

This ensures your business plan anticipates tax payments, not just sales growth.

4. Integrate Input Tax Credits (ITCs) and Input Tax Refunds (ITRs)

Startups incur heavy initial costs — rent, legal fees, equipment, and marketing — most of which include GST/QST. These taxes are recoverable through ITCs (for GST) and ITRs (for QST).

To claim them:

• Register for GST/QST before incurring major expenses.

• Keep all invoices showing suppliers’ registration numbers.

• Track tax paid on each expense category in your accounting software.

Example:

In your financial projections, show how claiming ITCs/ITRs offsets startup costs and improves net cash flow.

5. Forecast GST/QST Filing and Payment Schedules

Revenu Québec and CRA assign filing frequencies based on your expected sales volume:

In your business plan:

• Include a compliance calendar for filing and payment deadlines.

• Estimate administrative costs for accounting or bookkeeping services.

• Allocate time and staff for quarterly remittances and reconciliations.

6. Include a Tax Compliance Section in Your Business Plan

Investors and lenders view strong compliance as a sign of credibility. Include a section titled “Sales Tax Compliance Strategy” that addresses:

• Registration status and numbers (GST and QST).

• Filing frequency and responsible staff.

• Process for reconciling taxes monthly.

• Use of accounting software (e.g., QuickBooks, Sage, or Xero) for automated GST/QST tracking.

• External CPA firm (Mackisen CPA Montreal) overseeing filings and audit readiness.

Example Excerpt:

“Our business will register for GST and QST before operations commence. Collected taxes will be transferred to a designated account weekly. Mackisen CPA Montreal will oversee quarterly filings and maintain audit-ready documentation.”

This communicates fiscal discipline and professionalism to investors.

7. Address Cross-Provincial or E-Commerce Sales

If your startup sells across Canada or online:

• Register for GST federally through CRA.

• Charge QST on sales to Quebec customers if operating or registered in Quebec.

• For other provinces, determine applicable HST or provincial taxes.

• Implement e-commerce platforms (Shopify, WooCommerce, Stripe) with automated tax calculators to avoid mischarges.

Mackisen Tip: Centralize all sales tax tracking through one system to simplify reconciliation across multiple jurisdictions.

8. Budget for Professional Tax Assistance

Even small startups benefit from professional tax guidance:

• Include a line in your business plan for accounting or CPA services (typically $1,500–$3,000 annually for small startups).

• Factor in potential costs for software, training, and periodic consultations with a tax expert.

This ensures compliance from the beginning and reduces costly errors later.

Jurisprudence and Legal Insight
Key legal precedents emphasize early tax compliance and recordkeeping:

• Canderel Ltd. v. Canada (SCC 1998) — tax filings must reflect economic reality.

• Hickman Motors Ltd. v. Canada (SCC 1997) — CRA assessments are presumed correct unless proven otherwise with documentation.

• Lac d’Amiante du Québec Ltée (SCC 2001) — Revenu Québec has full authority to audit and reassess QST filings.

For startups, this means compliance isn’t optional — it’s part of your business foundation.

9. Keep Audit-Ready Documentation from Day One

Revenu Québec and CRA can audit within four years of any filing. Maintain:

• Copies of all invoices and receipts.

• GST/QST return confirmations.

• Bank statements showing tax remittances.

• Monthly reconciliation reports.

• Supplier registration verification (GST/QST numbers).

At Mackisen CPA Montreal, we provide startups with an Audit-Ready Tax Binder system — digital or physical — to ensure that every transaction is traceable and defensible.

Winning With CRA and Revenu Québec
At Mackisen CPA Montreal, we integrate tax compliance directly into your startup’s business plan:

1. Tax Registration Setup – We register your business for GST and QST.

2. System Configuration – We install compliant accounting software and templates.

3. Cash Flow Forecasting – We project quarterly GST/QST liabilities and refund opportunities.

4. Training & Reporting – We train your team to track and reconcile taxes accurately.

5. Investor Support – We prepare financial sections that strengthen investor confidence.

Mackisen Service Hub: Startup Tax Compliance & Planning
Our Mackisen Service Hub offers specialized startup services, including:

• GST/QST registration and filing setup.

• Business plan integration with tax forecasts.

• Cash flow and ITC/ITR optimization.

• Compliance monitoring and audit protection.

Our bilingual CPA auditors and tax lawyers trained at McGill, Université de Montréal, and Concordia University ensure your startup is compliant, credible, and investment-ready.

Real Client Example
A Montreal tech startup overlooked QST registration in its business plan and lost $27,000 in unclaimed Input Tax Refunds. Mackisen CPA registered the business retroactively, recovered the refunds, and redesigned their financial plan to include QST management. The company’s next investor pitch successfully showcased improved profitability and compliance.

Why Mackisen
With more than 35 years of combined CPA and legal experience, Mackisen CPA Montreal ensures that startups integrate GST/QST into their business plans seamlessly from registration to forecasting and audit defense.

When you build your business plan with Mackisen, your startup begins not just with vision — but with compliance, clarity, and financial confidence.