Although starting a new business is an exciting journey, there are obligations involved, such as preparing and paying taxes on time. If you are a new startup business owner, it’s essential to understand how tax compliance works. They are about ensuring that your business runs smoothly, grows the right way, and avoids penalties. In this blog post, we’ll help you understand the primary tax responsibilities every startup business owner must know. We’ll explain the meaning of tax compliance, the steps involved to get started, and how working with accountants in Melbourne can make the process easier.
Understanding the meaning of tax compliance
Tax compliance means sticking to the tax rules announced by the government or ATO that apply to your business. Tax compliance includes:
- Declaring your income accurately
- Filing your income tax return on time
- Recording and keeping proper financial records
For startup business owners, the early days are crucial. Getting this right from the start can help your business a lot to meet its goals. Not meeting tax obligations can lead to audits, fines, and issues with cash flow. A registered tax agent can guide you through the process so you can stay compliant.
Choose the right business structure
Your choice of business structure will impact your tax liability and tax management. It also impacts your tasks when filing your ABN tax return and managing GST. Here are some common options for startups:
- Sole trader: Easy to start, but you will be responsible for all taxes and debts.
- Company: It is quite complex, but it offers a professional image and protection. You can engage an accountant to handle tax matters for your company. You can also find someone near your company by searching online for ‘accountant for small business near me’.
- Partnerships and trusts are useful in some cases, but require more paperwork and planning.
A tax accountant can help you choose the right structure to help you achieve your goals and explain how each structure impacts your tax lodgments.
Apply for an ABN and stay updated with your tax duties
In Australia, all companies have to apply for an ABN. It is required for issuing invoices and filing tax returns. After ABN registration, you will have to consider the following obligations:
- BAS lodgment if you are registered for GST
- PAYG withholding if you have staff
- A tax agent can help ensure your obligations are met and deadlines are never missed.
Keep your records organised
You need to record:
- Expenses and receipts
- Sales and income
- Employee payments
- Tax payments and lodgments
You can rely on small business bookkeeping Melbourne for accurate record-keeping. Clear and organised business records help with seamless income tax lodgment, allow you to claim potential tax deductions, and avoid mistakes when filing your BAS and GST returns. You can seek help from an accounting software or a professional bookkeeper who can set up your systems and ensure everything is organised from day one.
Understand when and how to file an income tax return
Startups are required to submit their income tax return at the end of each financial year. The deadlines and submission method may vary depending on your business structure.
Lodgement Options:
- You can file directly through the ATO portal.
- Alternatively, you can seek help from a registered tax agent for professional assistance and extended filing deadlines.
- Keep in mind that filing late can result in penalties, so it’s essential to be aware of your specific lodgement dates.
Handle BAS and GST lodgment
If your company earns over $75,000 a year, you are required to register for GST and include it on your invoices. You’ll also need to claim GST credits for business purchases.
Through your BAS lodgment, you inform the ATO of your PAYG, GST, and any other related taxes. It’s usually done quarterly, but some businesses file monthly or annually. To avoid mistakes, many startups seek help from a registered tax agent to manage their BAS.
Conclusion
If you are a startup business owner, you must be aware of tax compliance. Between employees, customers, and planning for business growth, tax compliance falls behind. That’s where Reliable Melbourne Accountants come in to help you.