The Importance of Tracking GST as a Sole Proprietor (Before It Becomes a Problem)

Sole ProprietorBookkeepingCorporate Taxation

Jul 1

If your GST records are more “organized chaos” than actual system— you’re not alone.

For Canadian sole proprietors, tracking GST properly—whether you're using Excel or QBO—is one of those behind-the-scenes tasks that can either keep your books clean or become a major headache. And summer is the perfect time to catch up before things pile up in the fall!

Keeping tabs on GST doesn’t have to be hard—and it’ll save you headaches down the road. So, let’s break it down:

**1. Why You Have to Track GST Separately**

Whether you’re using QuickBooks Online or your own spreadsheet, the key is this:

👉 You need to know how much GST you’ve collected and how much you’ve paid—on 100% business expenses only.

Why? Because if you’re not tracking GST separately, you’re likely spending it as part of your income.
The risk? Big surprise balances owing at year-end or missed credits on legit business expenses.

If you’re using our template, you’ll notice it breaks out GST clearly on each expense. That’s on purpose—so you're not scrambling at the end of the year to dig through receipts.

2. Pitfalls Sole Proprietors Run Into All the Time

Even if you’re trying your best, these are the common areas that trip people up:

Not separating GST from gross revenue
Especially when you’re new to charging GST, it’s easy to forget that money isn’t “yours”—you’re just collecting it for the CRA.
Recording GST on mixed-use items
Using QBO? Watch out. The system might automatically calculate GST on everything unless you override it. Only track GST on 100% business expenses. For example:

A personal cell phone used for business? You may only be able to claim a portion.
Meals? There are partial limits.

Assuming everything has GST
Not all purchases include GST—especially software subscriptions (like Canva or Zoom) or USD purchases from US-based platforms. Always check the receipt or invoice.
Letting it pile up
GST isn’t something you want to “figure out later.” If you don’t track it monthly, you’ll likely miss credits or misreport what you owe.

3. Simple Tips to Stay on Top of GST Year-Round

You don’t need to overcomplicate this. Just build in a rhythm:

• Use a spreadsheet template that separates GST (we provide one!)

• In QBO? Review each transaction—especially mixed-use items—and override GST fields as needed.

• Go line by line on your receipts—not everything is claimable, and not everything includes GST.

• Do a mini check-in monthly or quarterly so you’re not scrambling when it’s time to file.

Tip: Keep your receipts organized—digitally or physically. CRA can ask for proof anytime, and if you’re ever audited or reviewed, having everything sorted will save you hours (and a major headache).

4. Don’t Wait Until It’s a Problem

If you’ve already registered for GST, tracking needs to be a monthly habit—not a year-end scramble. And if you haven’t registered but you’re close to the $30,000 threshold, now is the time to plan.

These are conversations we love having mid-year, before things get messy.