Starting an E-Commerce Business: A Tax Compliance Checklist for New Entrepreneurs — CPA Firm Near You, Montreal

Starting an e-commerce business in Quebec is easier than ever — but the tax rules are not. New online entrepreneurs often overlook GST/QST registration, income reporting, inventory tracking, shipping deductions, and platform fees. These mistakes lead to penalties, reassessments, or missed refunds. This guide provides a complete tax compliance checklist for new e-commerce businesses and explains how a CPA firm near you in Montreal can help set everything up correctly from day one.

Legal and Regulatory Framework

Under the Income Tax Act and the Taxation Act of Quebec, all online sales must be reported as business income, whether made through Shopify, Amazon, Etsy, eBay, TikTok Shop, Facebook Marketplace, or your own website. GST and QST registration becomes mandatory once your annual taxable sales exceed the small-supplier threshold. Digital products, physical products, and subscription services all require tracking and proper invoicing. CRA and Revenu Québec require businesses to maintain invoices, purchase receipts, merchant statements, and detailed books reflecting income, cost of goods sold, and inventory changes.

Key Court Decisions

Courts have ruled that e-commerce businesses must maintain accurate records of all sales and expenses. Judges have denied deductions where sellers could not produce receipts for materials, shipping, packaging, or advertising. Several rulings confirm that sales tax must be collected based on the purchaser’s province and that failure to charge GST/QST or PST can result in large retroactive assessments. Courts also emphasize that inventory and cost-of-goods-sold calculations must be supported by reliable data, not estimates.

Why CRA and Revenu Québec Target E-Commerce Startups

Auditors increasingly target new online businesses because:
• Platform data (Shopify, Amazon, PayPal, Stripe) is automatically shared with CRA
• Many sellers exceed the GST/QST threshold without registering
• Digital products are often misclassified
• Inventory records are incomplete or missing
• Personal and business expenses are mixed
• Shipping and advertising deductions are overstated
• Multi-province sales tax is applied incorrectly

Without a proper system in place, e-commerce owners face reassessments quickly.

Mackisen Strategy

At Mackisen CPA Montreal, we help new e-commerce entrepreneurs set up clean, audit-proof accounting systems. We determine GST/QST and PST obligations, configure your e-commerce platform with correct tax rates, establish bookkeeping categories for cost of goods sold, set up inventory tracking, reconcile merchant payouts, and optimize deductions for shipping, advertising, apps, packaging, and platform fees. We prepare year-end filings and provide ongoing guidance as your business scales.

Real Client Experience

A Montreal startup launched a Shopify store but did not register for GST/QST after exceeding the revenue threshold. Revenu Québec assessed thousands in retroactive tax. We corrected filings, registered the business retroactively, set up proper tax rules in Shopify, and negotiated a repayment arrangement. Another seller lacked receipts for packaging and inventory; we reconstructed cost-of-goods-sold using supplier data and prevented a costly reassessment.

Common Questions

Do new e-commerce businesses need to register for GST/QST immediately?

Only once they exceed the small-supplier threshold — unless selling taxable digital services that require early registration.

What expenses can e-commerce startups deduct?

Inventory cost, packaging, apps, advertising, software, shipping, merchant fees, and home office expenses with proper documentation.

Do I need a bookkeeping system from day one?

Yes. E-commerce businesses generate complex transactions — proper bookkeeping prevents audits and tax penalties.

Are digital products taxable?

Most are taxable under GST/QST rules and require registration once thresholds are met.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps new e-commerce entrepreneurs start strong with compliant, optimized tax systems. Whether you’re launching your first Shopify store or scaling across multiple platforms, our expert team ensures precision, transparency, and audit protection.