Setting Up in Business? What You Need to Know about Those Taxes

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They say that there are only two things that are certain in life — death and taxes. If you are in the process of starting up a new business, you should know that the latter is definitely something you need to pay attention to. Especially if you don't want to garner the attention of the ATO! What taxation do you need to be aware of as you plan for the weeks and months ahead?

Goods and Services

The Goods and Services Tax, or GST, is essentially a tax that applies to all the transactions you make in terms of both sales and purchases. Generally, this will come into play in most situations, although there are some items that are excluded in relation to overseas sales. Usually, expect to account for a GST of 10% if you're projecting gross sales that are more than $75,000 in any financial year. You can still register for GST voluntarily if you project a turnover of less than that amount. This will help you to 'claim back' a lot of the expenditure you make in your start-up. In everyday business, GST needs to be added to the invoices you send to your customers.

The BAS

When you enter the magical world of GST, you also come across the 'business activity statement', also known as the BAS. This is a statement which you are now obliged to send into the government as you account for the taxes that you kindly collected for them. The amount that you send will be the amount that you collected, less the money claimed back on your purchases. This form needs to be completed every year, quarter or every month depending on the type and size of your business. For example, if you import goods, then you are generally required to send in this statement every month, and if you have registered for GST voluntarily, you can send it in every year.

PAYG

Taxes that you deduct when you pay your staff should be withheld and sent into the tax office with your BAS every month or every quarter. The way this works is that when you start paying tax on business profits, PAYG income tax must also be paid by instalments through the BAS.

Be Careful of Errors

You need to be very careful when accounting for your taxes as many start-up owners do not fully understand the complex requirements. Just as one example, you cannot claim GST against all your expenses. Elements like bank charges, registration of vehicles, certain advertising expenses (like 'pay per click') are not allowable.

It is advisable to get BAS agents to help you, especially in your early days.

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8 November 2016

Family Firm: How Accountants Help You Prosper

Good day. I’m Linda and I run two family businesses — building contractor and aged care staff agency. It is quite a feat to juggle schedules and keep track of finances. I have become quite an expert with business management software. I have also learnt the vital importance of having good accountants to give advice and keep bookwork up-to-date. Prior to starting our family businesses, I honestly thought accountants existed to organise tax returns. I now understand that their jobs are much more complex and they can help your business prosper. I started this blog to highlight the numerous ways I’ve found that accountants can contribute to financial success. Please browse through the posts and I hope you find something useful within.