You’ve done it. You’ve perfected that stunning piece of pottery, that hand-carved cedar box, or the intricate jewelry inspired by the wild landscapes between Prince Rupert and the Cariboo. You probably started out at local markets in Terrace or Prince George, but now your work is catching eyes online. It’s official: your passion is a business. And with that amazing step comes… well, taxes.
But don’t let that word send you running for the hills. Seriously. Figuring out taxes as a creative entrepreneur in Northern BC might feel like a huge mountain to climb, but it’s totally manageable once you get the hang of the basics. Just think of it as another part of your craft—the part that keeps your business healthy and thriving for years to come.
So, You’re Turning Your Passion into a Business. What Does the CRA Think?
First things first: when does your hobby officially become a business in the eyes of the Canada Revenue Agency (CRA)? The second you start selling your work with the goal of making a profit. It doesn’t matter if you’re working from your kitchen table as a sole proprietor or if you’ve got a small studio downtown. The CRA sees you as a business. This is actually good news! It means you need to report your income, but it also means you get to deduct your expenses. And that journey starts with the materials you buy.
Before You Sell: The Tax Rules on Buying Your Materials in BC
Every single time you buy supplies—whether it’s clay from a local spot, fabric from a shop in Quesnel, or specialty tools you found online—you’re dealing with taxes. The two you’ll see pop up constantly are the Goods and Services Tax (GST) and the Provincial Sales Tax (PST).
If you’ve registered for a GST/HST number (we’ll get to that in a sec), you can often claim back the GST you pay on your business purchases. These are called Input Tax Credits (ITCs). Basically, it’s the government giving you a refund on the tax you paid for things you genuinely needed for your business. So, please, keep those receipts!
Did You Pay PST on That Clay? Navigating BC’s Provincial Sales Tax on Supplies
British Columbia’s PST works a little differently. For most of the materials you buy to make your products, you’ll pay the 7% PST, and that’s that. You just count the full price, including the PST, as the cost of your material. It simply becomes one of your business expenses.
But what if you buy from a supplier in Alberta who doesn’t charge PST?
This is where a rule that trips a lot of people up comes into play: you might have to self-assess. If you buy a taxable item for your business from outside BC (and the seller didn’t collect BC’s PST), you’re legally required to figure out the PST you should have paid and send it to the provincial government yourself. It’s a super important step for staying on the right side of the rules.
Your Etsy Shop is Live! Do You Need a GST/HST Number?
This is the big question every growing artisan asks. Do you really need to start charging your customers tax? It all boils down to how much you’re making.
The CRA has a clear rule for this, and it’s something every small business owner in Canada needs to know.
Understanding the ‘Small Supplier’ Rule (And When It Stops Applying to You)
Here’s the deal: the CRA considers you a “small supplier” if your total worldwide revenues from everything you sell are $30,000 or less in any four consecutive calendar quarters. Notice it’s not just a single calendar year—it’s any four quarters in a row.
- As a small supplier, you don’t have to register for, collect, or remit GST/HST. This definitely makes life easier when you’re just getting started.
- The second your revenues tip over that $30,000 threshold, you’re not a small supplier anymore. You have to register for a GST/HST number and start collecting tax on your sales.
So keep a close eye on your revenue! Hitting that milestone is a fantastic sign of success, it just comes with a few new responsibilities.
Selling to a Neighbour vs. Selling to a Newfoundlander: How Provincial Taxes Work
Once you’re a GST/HST registrant, the tax you charge is all about where your customer lives—what’s known as the “place of supply.” It’s the whole reason your online shopping cart asks for a shipping address before it spits out the final total.
Here’s a quick look at how it works for sales you make from your home base in Northern BC:
- Customer in British Columbia: You charge 5% GST + 7% PST.
- Customer in Alberta: You just charge 5% GST (since they have no provincial sales tax).
- Customer in Ontario: You charge 13% HST.
- Customer in Nova Scotia: You charge 15% HST.
Platforms like Etsy and Shopify are great and have tools to help with these calculations, but it’s still 100% your responsibility to make sure they’re set up right and that you’re sending the right amounts to the government.
Keeping It Simple: Practical Tips for Tracking Your Expenses and Sales
Good records are your absolute best friend. They aren’t just for tax time; they tell you the real story of how your business is doing. Here are a few simple habits to get into right now:
- Open a Separate Bank Account: Please, don’t mix your business and personal money. It turns into a massive headache down the road. A dedicated business account makes tracking what’s coming in and going out a total breeze.
- Keep Every Single Receipt: Is it a gas receipt from a trip to a craft market in Williams Lake? An email invoice for an online tool? Keep it. Save digital copies in a cloud folder so you never lose them.
- Track Everything: You can use a simple spreadsheet or some basic accounting software. Just log every sale and every expense as it happens. Don’t be that person sorting through a shoebox of crumpled receipts next April.
Your Top Questions Answered
Let’s clear up some of the most common questions we hear from artisans just like you.
- What’s the real difference between a GST/HST ‘registrant’ and a ‘small supplier’ for an Etsy seller? A ‘small supplier’ is a business that makes $30,000 or less over four straight quarters, so they don’t have to register for GST/HST. A ‘registrant’ is a business that’s either crossed that income line or decided to register voluntarily. They have to collect and send in GST/HST on what they sell.
- I buy my materials online from a supplier in Alberta. Do I still need to worry about BC PST? Yep, you do. This is that self-assessment rule in action. If the thing you bought would normally have PST charged on it in BC, you’re responsible for calculating and paying that PST to the BC government yourself.
- Can I claim my studio space in my Prince George home as a business expense? You bet! If you have a dedicated space in your home that you use only for your business, you can deduct a portion of your home expenses. Things like utilities, insurance, and property taxes can be claimed based on the percentage of your home that space takes up.
- My Shopify store automatically calculates some taxes. Does that mean I’m off the hook for filing? Nope. While those tools are incredibly helpful for getting the numbers right, they don’t file or send the taxes in for you. You are still completely responsible for filing your returns and paying the money you’ve collected on time.
- I sell at the Williams Lake farmers’ market and online. How do I handle taxes for both? It’s all one big pot. All the revenue from all your sales channels—markets, your website, commissions, you name it—counts toward that single $30,000 small supplier threshold.
- What specific info do I need on my receipts for materials? A proper receipt should show the seller’s name, the date, a description of what you bought, the total amount, and—this is critical—exactly how much GST/PST you paid.
Figuring out taxes is a journey, and getting it right from the start puts your creative business on the best path forward. This guide is a great place to start, but every artisan’s situation is unique. For advice that’s tailored to your craft, your sales, and your goals, talking to a professional can make a world of difference. An accountant can help make sure your books are solid and you’re taking advantage of every deduction you’re entitled to. To get clear, straightforward advice for your business, we’re here to help you get started at Your Modern Accountant.