An increasing number of Australians have had enough of punching the clock and have decided to branch out on their own. If you are one of their number, this can be an exciting time, with a lot of potential and the opportunity to craft your own future. However, there is a fair amount of paperwork involved and a number of different taxes to consider. If you want to keep on the good side of the ATO, what do you need to know about your tax obligations?
Goods and Services
The government likes you to be an independent tax collector and therefore requires you to account for GST, or Goods and Services Tax. This is applied to all transactions you make and is added to many of the items that you buy for your business. You may not have to register when you're first starting out, but as your revenues increase, you will eventually have to add the GST to your transactions. Many people opt to register anyway so that they can claim back the tax component of the equipment or machinery that they buy for their business use. In the long term, you will have to get used to adding the GST to all the invoices you send out.
You will also need to collect taxes from money that you pay to your staff. This needs to be sent into the tax office every month or quarter, depending on the size of your business, and the information should be included on what is known as the BAS.
The business activity statement (BAS) is essentially a summary of your activity so that the government knows how much tax you have gathered and are going to send to them. The bottom line figure is the amount that you collect, less any money claimed back against your purchases. The size of your business will determine how often you need to send this form in, and it is either every month, quarter or year. If you import goods as part of your operation, you may be required to send this statement in monthly, but if your business is still small and in the start-up phase, you can likely send it in annually.
This may sound relatively straightforward, but as always, the devil is in the details. For example, you're not allowed to claim GST against all of your expenditure, and this is far from intuitive. Certain types of advertising expenses associated with online transactions are not allowable for some reason, and this is just one of many anomalies.
Your Best Bet
So that you can sleep at night and not fall foul of tax regulations, it's a good idea for you to get help from an accountant who provides taxation services to help you.