I'm from Ontario Canada and I recently opened a small home cake biz! No one knows anything about opening a business here! Everytime I call a gov't office, they give me a different number to call! It is getting a little frustrating!
I need to know what (if any) taxes I have to charge for a cake. I talked to someone a few weeks ago when I registered for the business and she told me I had to charge PST, and now I just talked to someone else from a PST office and she is telling me I don't need to charge PST because a whole cake is an Exempt Food Product! AHHHHHHH
I dont' think I need to charge GST because my business will NOT make over 30,000 this year. But then again, that info coudl be wrong too!
If anyone here from Canada has a cake biz and can help me out it would be GREATLY appreciated!
THanks so much!
i don't have a cake buisness.. but my mom had a wedding buisness (flowers ect) for years and all she did was get the buisness licence... i don't remember he ever filing taxes for the buisness because it was a "once in awhile" type thing.. so she didn't make enough a year.
Why not call an accountant and see what they say.
You could always keep copies of your recipts.. for cake orders and your supplies (gas to get the cake to a location ect) incase you end up having to file taxes
You're right that cakes are exempt from PST because it's food, but you could charge PST on things like the box and board, cake toppers/ornaments, etc.
It's a bit troublesome, but the advantage to it, is that you get the vendor's permit, which can allow you to shop at wholesale warehouses.
Try calling the Zoning Office and the Municipal Licensing and Standards in your area.
jdogga....I am having the exact problem, I am in Whitby, ON, and all I get is the run around, it is sooo frustrating.....if you get any more info let me know, and I will do the same.......
I want to step the cake thing up a bit and would like to do some business cards, but after reading so much about what our American friends must go through for advertising, I just am at a loss as to what to do.....any help from anyone would be appreciated!!!
one more thing...can I only take cash??? What if someone wants to pay with a cc??
I am not sure about the CC thing, make a paypal account??? I am not sure how to go about that one.....
Hey I've been wondering about all this tax stuff too. Also since you all seem to be from Ontario I have another question to add to the pile. What about food health and safety. Do I need my kitchen to be inspected by the health board? What if someone claimed I gave them food poisoning or something. Does anyone know what needs to be done for this situation. How can I protect myself?
Ur not allowed to bake and sell from home per health regs....
paypal works great when your just getting started I used it and its easy to setup. Now I have a terminal with debit MC and visa in the shop but I used paypal at first. You can send and invoice to your clients and they just follow the instructions on how to pay you. There are fees involved just charge enough to cover them or add a fee to your client.
Need to go to the local health dept for regulations and district or city hall business licensing office.
Health dept will tell you a seperate kitchen is needed for food saftey reasons. You dont need a pst # unless you sell retail items there is no tax on cake or food, for the GST you dont have to have a GST# unless you want to claim back the GST that you paid for products if you you do have the # you have to start charging it for your deliveries and rentals or unles you are selling less than 6 cupcakes , cookies or square, GST is charged if you have #.
When you go into a restaurant, they will have on the wall, usually in a frame, a certificate that states they have passed the public health inspection and are permitted to sell food. If you have not had a public health inspection and a certificate, you can't sell food (legally). In Alberta, this means a seperate from domestic use kitchen, and it has to have certain features. I have been told to contact the public health inspector for my area for details on what they look for, which seems dumb to me, because you'd think the details should be province wide. I don't have a seperate kitchen, so I don't sell cakes. I'm not saying I would never sell a cake if someone wanted to pay me, but I've heard that the fines are huge (if it was just a couple hundred bucks, I would be willing to take the chance).
Now -- tax wise -- with the GST you do not HAVE to charge unless your revenues exceed $30,000 per year. The reason why you might choose to charge GST is that if you charge it, you also get to claim back what you have paid. E.g. my husband is a welder, so we charge GST. Say we do business of $100,000 in a year -- that's $7000 in GST we collect. However, we pay GST on fuel, welding supplies, equipment, etc. Say that totals $4000 a year (I'm just making up numbers). We then pay the government $3000 in GST. We also farm. A lot of the income is GST exempt, so say we collect $2000 in GST in the year. But we paid $3000 in GST over the year. At the end of the year, we file and get $1000 back. Technically, you will make more money by charging GST because that is tacked onto your price, and you will get back the GST on your supplies. But there is a certain amount of hassle to it. I don't know about PST because Alberta doesn't have a PST (woo hoo). There is a GST exemption on food, but I'm hazy on how that works -- I had a summer job in a bakery when GST first came out and if you bought 6 items from the display case there was no GST. Under 6 items you paid.
Another tax thing. Say you have a regular job making $40,000/yr. You do cakes on the side, you're not incorporated, and you make $2000 on your cakes over the year. You don't get out of paying taxes on that $2000 because it is so low, that is added to your personal income for the year, so you will be taxed on $42,000. If your ONLY income is cakes, and it is less than $9000 or whatever a year, then you don't have to file, but I mean, if you are making less than $9000 a year it would be fooling not to file and claim your CCTB (if you have kids) and GST rebate and whatever other benefits are administered through the tax system. I'm not saying that if someone offered to pay for a cake I would be darn sure to claim that $50 profit (or whatever) on my taxes, but if I was doing it as a business, I would. Tax penalties are stiff -- something like 5% of taxes owed plus 1% per month (and FYI if you owe taxes for not filing or whatever and 'fess up before they come after you, they will waive some of the penalty -- I think the 5%).
So -- if you are an illegal cake seller but you do want to pay your taxes (and your fellow taxpayers thank you for pitching in), will the government rat you out to public health? Who knows, but a few years ago we moved, and we kept getting our company notices for payroll deductions without a problem. Then we got contacted because we hadn't filed some other form for two years. Turns out that when we changed our address with Revenue Canada (payroll deductions), it wasn't changed with Revenue Canada (whatever other department), and the fools apparently couldn't talk to each other to find out why all their forms were getting returned. Grrr. I suspect with the privacy laws they are even less willing/able to share contact info.