As a business owner, you need to know your tax obligations. In this guide, we’ll discuss and understand tax obligations.
Register Your Business
ABN Registration
If you are starting a new business, you may need to apply for an Australian Business Number (ABN). Not every business is liable for an ABN, so the registration process will ask specific questions to determine whether you need an ABN or not.
As a business owner, you’ll need an ABN, which means you:
- Provide services and products directly to your clients, whether that’s the public or other businesses.
- Source your own clients, for instance, by advertising your services and products.
- Quote and invoice for work, including negotiating or setting prices.
- Maintain a dedicated business bank account and carry appropriate business insurance.
- Report all business income, even if your earnings are below the tax-free threshold.
For more information about what your business is liable for, you can reach out to a tax accountant Melbourne.
An ABN has its own set of rules. You may need to:
- Register for goods and services tax (GST)
- File activity statements to the ATO
- Register for PAYG withholding and meet your super obligations for eligible employees
- Meet other federal, territory, and state regulatory obligations such as workers’ compensation, payroll tax, and operating licences.
GST Registration
You need to register for GST:
- If your business has a GST turnover of $75,000 or higher.
- When you start a new business and expect that your business turnover will reach the GST threshold in the first year of operation.
- If your existing business has reached the GST threshold.
- If your non-profit organisation has a GST turnover of $150,000 per year or more.
- When you offer limousine travel or taxi for passengers, irrespective of your GST turnover, this basically applies to both owner-drivers and if you rent or lease a taxi.
- If you want to claim fuel tax credits for your business.
To handle your GST matters, you can engage a professional accountant. You can also hire an accountant near you in Melbourne by searching online for ‘best accountant near me Melbourne’.
PAYG Withholding Registration
You need to register for PAYG withholding before you are required to make a payment subject to withholding. This is required even if no amount is withheld from a payment. Register your business for the following through the Australian Business Register:
- An Australian Business Number (ABN)
- GST
- PAYG withholding
- A business name.
If you need to withhold tax but don’t need an ABN, you are required to register for a PAYG withholding account.
Lodge Activity Statements
If your business is registered for GST, you need to file a business activity statement (BAS). Your BAS will help you report and pay your:
- Goods and services tax (GST)
- Pay As You Go (PAYG) instalments
- PAYG withholding tax
- Other taxes.
When you register for an Australian Business Number and GST, the ATO will automatically send you a BAS when it is time to file.
Keep Accurate Records
Legally, you are required to keep records of all financial transactions related to your superannuation, tax, and registration matters as you start, run, sell, change or close your business. This includes:
- Any documents related to your business’s expenses and income
- Any documents having details of any choice, election, estimate determination or calculation you make for your business’s tax and super matters, including how the estimate, calculation or determination was made.
To meet your record-keeping requirements and avoid common mistakes, ensure you understand what financial records are required for your business and make consistent and complete record-keeping practices a part of your daily business activities. As your business grows or changes over time, you need to review what records you are required to keep.
There can be financial and legal consequences if your business doesn’t meet record-keeping requirements. If you are not sure how this information applies to your circumstances, you can ask your registered tax or BAS agent, or contact ATO for help.
Conclusion
As a business owner, you need to meet several tax obligations. Some of the tax obligations are mentioned above. If you are still not sure about your tax obligations, you can get in touch with Reliable Melbourne Accountants.