The Good News: Most businesses in BC will benefit from the Harmonized Sales Tax (HST). The Bad News: If you don’t start preparing your business for the change now, you are going to be blindsided when the HST is implemented in July.

Action plan to prepare your business for the change:
1. Set up an implementation team that involves your accountant, sales, purchasing, IT, and budgeting and forecasting people.

2. Meet regularly to determine a list of key sales tax questions or issues to be addressed within each departments

3. Create a flow chart of operating processes for each department. These departmental flow charts will help you identify the tax “touch points” to be considered.

4. Determine the correct strategy at each touch point and implement the fix.

Questions to answer before the deadline:
1. How will the HST affect operating expenses, capital expenditures, and employee expense reporting?
2. Should you buy new equipment/office furniture before or after July 2010?
3. In terms of capital expenditures, should you lease or buy?
4. What will be the effect on customer invoicing?
5. How will the input tax credit restrictions affect your business?

Other considerations:
1. Your customers may expect a price break if your organization is currently paying PST on purchases, which will be subject to recoverable HST after July 1, 2010. Recognize this expectation now and start the process of determining exactly how much you may be able to reduce prices. Your employees will be instrumental in facilitating the process and can lend much support to the positive communication of changes to customers. Make sure your employees are properly trained and understand the new tax regime.
2. Your IT department will be a major player in adapting to the HST since a new tax structure will have a significant effect on software systems. Make sure they are on side early with the company’s needs to minimize potential disruption.

Familiarizing yourself with the intricacies of the HST structure will position your business for growth. When it comes to HST implementation, your company’s bottom line is at stake; therefore foresight is a valuable asset.

Glenn Ayrton is registered as an Investment Advisor through Sora Group Wealth Advisors Inc., a Member of the  Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund (CIPF). This information is general in nature, and is intended for educational purposes only. For specific situations you should consult the appropriate legal, accounting or tax expert. This update is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any securities. The views expressed are those of the author and not necessarily those of Sora Group Wealth Advisors Inc.