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What is the Quick Method of Accounting?

Let us remind you that you are under obligation to charge the GST and the QST if you sell for more than $30 000 yearly. However, if you bill for less, do you need to charge taxes? You do not have to but you can if you want. We then suggest you to closely monitor your sales in order to avoid unpleasant surprises. It is true that taxes come with many conditions, complicated regulations and terms; it is easy to lose track as beginners. There are, however, a few tools and methods that can help improve your life quality as a self-employed person. Have you ever heard of the quick method of accounting? No? Take then the time to read the following lines, you might save a lot of time and money! <h3>What exactly is the quick method of accounting?</h3> The quick method of accounting also called the quick tax method, allows you to send fewer taxes to government levels. When you bill 5% for GST, you return only 3.6%. It is the same with the QST you may ask? Yes. When you bill 9.975% for QST, you return only 6.6%. The rest is yours. It sounds too good to be true, right? Know, however, that if you use the quick method of accounting, you then cannot ask for the input tax credits (ITCs) and the input tax refunds (ITRs), excluding for some depreciable assets. If you are not familiar with these terms, know that these are your business related current expenditure paid taxes. Moreover, the tax rates applicable may depend on your line of business. We suggest you read <a href="https://www.revenuquebec.ca/en/businesses/consumption-taxes/gsthst-and-qst/reporting-qst-and-gsthst/the-quick-method-of-accounting-for-calculating-gst-and-qst-remittances/applicable-rates/" target="_blank">the Applicable Rates article on Revenu Quebec</a>.     Do you want to know what is the cherry on top? You also have access to an additional 1% credit on the first $30 000 for GST and on the first $31 421 for QST yearly with the quick method of accounting. You cannot, however, carry over the credit from one year to another. It is also important to know that this specific method has a direct impact on your tax report. In fact, the balance between the billed taxes and the taxes you return to the different government levels will be considered as an income on your tax report. Your accountant can then help you to verify if the quick method of accounting is an adequate option for you. <h3>Can I use the quick method of accounting?</h3> It is unfortunately not because you are a self-employed person that you can automatically use the quick method of accounting. In fact, you need to meet some requirements before: <ul> <li> You have already enrolled for GST and QST </li> <li> You are a self-employed person, an individual or a corporate business </li> <li> Your revenues do not exceed $400 000 (including GST) nor $418 952 (including QST) </li> </ul> In addition, some types of businesses cannot use the quick method of accounting, such as listed financial institutions, charities, selected public services bodies, as well as firms that provide legal, accounting, actuarial or fiscal services. <h3>How can I elect to use this method?</h3> If you meet the requirements mentioned above, you can send a request to Revenu Quebec. You must first complete the form <a href="https://www.revenuquebec.ca/en/online-services/forms-and-publications/current-details/fp-2074-v/" target="_blank">Election or Revocation of Election Respecting the Quick Method of Accounting FP-2074-V</a>. Unlike other forms, this one is only 4 pages long and can be filled online. Please note that once you have made the decision to use the quick method of accounting, you must use it for at least one year. You will also need to send your form at a specific moment according to whether you need to submit a monthly, a three-monthly or an annual report. <h3>Can I use the quick accounting method on Momenteo?</h3> YES! We are glad to inform you that you can effectively use the quick accounting method on Momenteo. To use this option you need to click on the Reports section located left, and then on Tax Summary. Change the accounting method from Regular to Quick accounting method. Voila! It’s done! Obviously, you need to fill the form and meet all requirements mentioned above before you can use the quick accounting method on Momenteo. To conclude, it is always great to learn that you can save time and money with simple tools and methods. The quick accounting method seems to be here to stay; so why not profit from it?  Do not hesitate to contact your accountant or Revenu Quebec if you have any questions. In the meanwhile, Momenteo’s team wishes you a nice tax season and is available to help you live your freelance life fully.

Ariane