These are exciting times. You are just about ready to open your new business. You’ve been busy setting up all of the systems that you need for your business to work – including the bookkeeping. You know that proper bookkeeping will give you the best perspective on how your business is performing. It’s not glamorous, but it’s very important. It can also be very confusing for first-time business owners.
This is where many owners succumb to pitfalls while setting up their business. Because there are many forms to file and BAS regulations to follow, things can sometimes be missed. One such thing is GST registration. It’s surprising how many Gold Coast start-ups fail to register for GST. If you are just starting your business, it could be very beneficial to register for GST. Let’s look at a few reasons why that is.
GST Registration Threshold
Firstly, you should know about a threshold that exists for business owners registering for GST. This threshold is applied to annual business income. Your GST is measured by the gross income of the business. The GST turnover rate is found by adding your monthly projected income. Once the year is added up, you’ll know your GST turnover.
The turnover number is very important, as it can help you choose whether or not you need to register for GST with the ATO. If your business is expected to have a turnover of over $75,000 annually, you will need to register for GST. If the business won’t meet the $75,000 mark, you are not obliged to register.
Be careful, however. If your business chooses not to register for GST, you must keep a close eye on your turnover. If you fail to register, and you surpass the threshold, you’ll have to pay a penalty to the ATO. Any extra income going to the ATO means less that’s going into your business. Not registering for GST means more work for you and your bookkeeping staff.
Benefits of Registering for GST
New businesses can see many different benefits from registering for GST. Below are a few examples of those benefits.
- Lodge Once a Year
For many business owners, the bookkeeping side of things is an arduous and time-consuming task. It takes a lot of effort and concentration – along with a good program – to accurately account for the goings on in your business year round. When it comes to your monthly, quarterly, and yearly BAS requirements, new business owners can become somewhat overwhelmed.
There are some things that the ATO need you to file quarterly to complete your business’ BAS. However, if you register for GST, you will only need to file the GST numbers once a year. Certainly keep track of your GST throughout each quarter. But keep in mind that you’ll only need to provide the ATO with your GST accounting at your year end.
- Tax Credits
Businesses are entitled to tax credits should they decide to register for GST. This is great news since it means more money coming back into the business with their tax return.
Not everything receives a GST credit, but there are a number of business expenses that will. If you make a purchase for both business and personal use, you can claim the business portion of GST. For example, should you purchase a vehicle through the business but use it for personal use, you are entitled to a GST credit. If you can’t claim 100 per cent of the vehicle costs, you are able to claim 100 per cent of GST on that vehicle if you lodge annually.
How to Register for the GST
If you are confident that your business will be above the GST registration threshold, then you should definitely take the steps to ensure that your business is sound in the eyes of the ATO. Firstly, you will require an Australian Business Number, or ABN, in order to get the process going. Next, simply contact the ATO through their business portal or over the phone. You can also contact them through your registered tax agent. Once they have your GST registration, you will be notified when everything has been filed and you will receive your registration details.
As a new business owner, you know what you need to do in order to get your business up and running. We at Darcy Bookkeeping & Business Services are always excited to see new Gold Coast ventures take off and succeed. That’s why we would love to help you in any way that we can. If you need any tips or assistance during your GST registration, feel free to give us a call. Our team of professionals will gladly guide you through whatever bookkeeping questions or concerns you may have.