Tax is something that people don’t like to pay, but they have to pay to help the country to function properly. Before you know the basics of taxes and how they work, you must know what tax is and why it is necessary for the nation. As a business owner, you also have to pay various taxes to the government. Many business owners hire a tax return accountant to manage tax-related matters to avoid penalties or fines. Business owners don’t have much time to look after tax-related matters, that’s why they seek help from tax accountants. In today’s blog, we’ll discuss what type of taxes businesses pay to the government.
What is Taxation?
Taxation is a term used when the government institutes a mandatory monetary obligation that most individuals have to pay. Residents and citizens have been paying taxes to the ATO or officials for a specific length of time. Taxation refers to all types of compulsory taxes that are imposed on both businesses and individuals. Some of the most common types of taxes are business tax, income tax, and GST.
What are Common Types of Taxes Businesses Need to Pay?
Paying taxes is every working individual or business’s responsibility. However, there are various types of tax that you have to pay based on your personal income, your investment and business activities. You can opt for accounting services for businesses to keep track of what taxes you are liable to. Take a look at the following section to know the most common types of taxes that businesses are required to pay:
Personal Income Tax
Personal income tax is one of the most common types of taxes that every working individual needs to pay as per their income situation. This tax is applied to an individual’s salaries, wages, investments, or any other form of personal income that an individual earns. The tax amount depends on various factors, including how much you earn, whether you are considered a high-income earner or low-income earner, etc. To know how much you need to pay income tax, your accountant will help you. For this purpose, you can hire accounting services for your company as your earnings might be high.
Goods and Services Tax
When you purchase something, you may have noticed on the receipts that many products have a GST section on them that shows how much GST was applied to the product that you purchased. GST tax is a broad-based tax of 10% on goods and services sold in Australia. GST tax will be often applied to products or services offered to you by other individuals if you are making payment for their expertise.
Usually, in Australia, businesses, sole traders and other organisations that are registered for GST will include the cost of GST payable in the price they charge for their services, and claim credits for the goods and services are included in the price of services they buy for their businesses. Your accountant also keeps track of GST tax for your business on your behalf, thus it would be beneficial for you to opt for accounting solutions. If you want to get accounting solutions near your location, you can also search for ‘accounting services near me.’
Business taxes are a type of taxes that you need to pay if you are a business owner or working as a sole trader with an ABN. The amount of business tax that you have to pay will be based on the amount of taxable income that your company generates. Business tax is not uncommon for business owners, so various business owners take help from accountants to keep their tax details and accounts up-to-date to make tax season smooth. Before you pay any kind of business taxes, you must have accurate financial records of your business, and the Melbourne bookkeeper can better help you with this matter. They are experts in organising and updating the financial records of your business so the accountant can help you with tax returns.
Capital Gains Tax (CGT)
CGT is a type of tax that you pay on the profits that you gain from selling assets, such as property. A capital loss or capital gain can be defined as the difference between what you paid for the asset and the cost or price you sold it for. If you have a capital gain or profit, you need to pay more tax. You can also opt for accounting services in Melbourne to get detailed knowledge regarding tax matters.
Taxes are a significant aspect of Australian society. Whether you have to pay personal income tax, business tax, or capital gains tax, knowing why you are paying them will help you understand the importance of taxes in our economy. If you are weak in managing numbers, you can get accounting solutions from the Accounting firm Melbourne.