The taxes you need to register for depend on the nature of your business. Some taxes apply to all businesses, while others may be mandatory based on factors like size, type, and revenue. There are also optional taxes that, while not required, can help streamline the tax process. In this blog, you’ll learn how to register your business for tax, what type of records you must maintain, goods and services tax, deductions you might need to consider, your tax obligations to staff, and your business activity statement.
What do you need to register your small business for tax?
When you pay tax returns, you may have to submit numerous documents to your small business accountant in Melbourne. The following information is required for taxes:
- Tax File Number (TFN): Sole traders can have their individual tax file numbers. Companies, partnerships, and trusts may need a separate tax file number.
- Australian Business Number (ABN): An ABN is required when invoicing, and it is used for several taxes and other business purposes.
- Goods and Services Tax (GST) Registration: GST registration is required if your current or estimated turnover is $75,000 per year or more.
- Pay As You Go (PAYG) Withholding: If you have employees, PAYG withholding is required. It is required if you have other workers and you enter into voluntary agreements to withhold amounts from your payments to them.
- Fringe Benefits Tax (FBT): Employers pay FBT for benefits given to an employee in place of wages or salary. It is only required if you provide fringe benefits to your staff.
- Payroll tax: You are only subject to payroll tax if your total Australian wages are above the tax-free threshold that applies in your territory or state.
What records do you need to keep?
Under taxation law, you have to maintain written evidence for five years from the date you file your tax return. Your tax return accountant will use the required records to prepare and file your tax return on time. The following are some important documents, you need to keep:
- Received payments
- Expenses associated with payments you have received
- Records of purchased assets, such as an investment property or shares
- Details of any donations, gifts, or contributions that may be tax deductible
- Contractors and employee records, such as copies of TFN declarations and any contracts, super, and payments.
GST and BAS
- If your business is registered for GST, you need to gather it on every taxable sale you make and pay it to the ATO.
- When you buy supplies for your business, you are allowed to claim back GST that has been added to the purchase price.
- At the end of each Business Activity Statement time period, send collected GST, subtract any GST credit, to the ATO.
- Use the Business Activity Statement to account for your Goods and Services Tax, PAYG withholding, PAYG instalments, and FBT instalments.
- For small business entities, GST reporting and payments will be made quarterly or annually, based on GST turnover.
What are the benefits of record-keeping?
If your business is doing well, then accurate record-keeping might be the reason. Complete records allow you to:
- Track the financial status of your business and know whether your business is getting profits or losses.
- With accurate record-keeping, you can make the right business decisions.
- Keep track of the cash flow of your company, which includes the money owed to you and the money you owe.
- Avoid tax penalties that may apply for failing to maintain accurate records. That’s why it’s crucial to maintain records of your business. For this, you can seek help from bookkeepers in Melbourne.
- Demonstrate your financial health to businesses, lenders, and tax professionals.
- Accurate record-keeping allows you to meet your super, tax, and employer obligations, including preparing and filing your returns, taxable payments, and BAS.
- Accurate record-keeping provides the information that the ATO need if they audit your business, making the process shorter and easier.
Conclusion
The blog outlines important information or documents you need to take to your accountant for tax returns. For more information, you can ask Reliable Melbourne Accountants.
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