Do you run a small business in Australia? If so, then you should pay taxes on time. Meeting all the tax obligations properly is the most important but challenging responsibility you have to take as the owner. Most business owners appoint a professional accountant or tax consultant to help them manage the tax issues. But, as the owner, you should also know and understand all the legal obligations regarding tax because submitting the accurate data to the ATO will solely rest with you. Here we discuss different duties you need to fulfil.
Business Registration Responsibilities
1. Australian Business Number (ABN)
Registering an Australian Business Number is the first step of setting up the business. ATO issues this unique number, which they use and other government departments, individuals, and business companies to spot your business. There is an option to do the registration online and for free. Note, if you want to register your business as a sole trader, then the ABN will get linked to the owner as an individual. But, if the business is operated through other small business structures like company, partnership or trust, then the ABN will be linked to that specific entity, not to the owner as an individual.
2. Tax File Number (TFN)
Another number your business must have is the TFN. If your business is operated through a sole trader or you are one of the partners in a partnership structure, then you can have the option to use your TFN. But, if it operates through a trust or a company or any other business structure, you should register your business to get a unique TFN. You can either register it along with the application for ABN or do it separately.
3. Goods and Services Tax (GST)
This is a very familiar name you may have come across multiple times. But you have to pay this tax only when your small business will reach a yearly turnover of $75000 or more. Well, if it is less than that amount, then also you have to register for GST. If you haven’t done it before, you have to fulfil it when the annual turnover touches the threshold. Here also, you can do the registration along with ABN registration or do it separately.
4. Additional taxes
In addition to GST, you have to pay other different taxes, if applicable. You can register these taxes too through the Australian Business Register. These taxes are Fringe Benefits Tax (FBT), Luxury Car Tax (LCT), Fuel Tax Credits (FTC), and Wine Equalization Tax (WET).
When you are running your business, you must keep all transactions’ records. These records include tax invoices, wage and salary records, sales receipts, purchases that your company makes, and any other sale and purchase records of different assets like land, office equipment or buildings. You have to include specific information in a transaction record like date, the character of the transaction (purchase, sale, rental, or wage, etc.), amount and purpose.
You should always keep an eye on that you should never change the information you have included in the records and keep them safely so that no one can put any mark on them. You have to keep most of these records at least for five years. You should keep all these crucial records for the specified time because ATO may ask you anytime to produce them.
Following the records you have kept following the rules, you must now report different information through a Business Activity Statement (BAS) to the ATO. The data will include business’ income, tax obligations and different business expenses. If you haven’t registered your business for GST, then you must submit the report of your business’ tax obligations through an Instalment Activity Statement (IAS).
Based on your business’ yearly turnover, you can lodge the BAS monthly, quarterly or annual. Most small businesses make the lodgement quarterly. You do not need to worry about the time because you will get an automated email from the ATO when the time comes to lodge, and you will find some already filled information for you, including the time period over which the report is constructed, BAS due date and the business details. After you get the form, you can fill in the remaining required information about expenses, sales, and taxes withheld following your records. This will help you determine the amount of money you have to pay in taxes to the ATO. A Perth tax accountant can help you in completing it.
PAYG stands for Pay As You Go. Whenever you recruit other people, maybe as employees or contractors, you have to register for PAYG. You can register it along with your ABN, and if you already hold an ABN, you can register for PAYG online through the business portal of the ATO. Here, you can withhold a specific amount from their payments, and this percentage amount will be based on the information they give in their tax file number declaration.
Not just PAYG withholding, you have to also pay the superannuation guarantee (SG) to your staff. This amount will go into their nominated super account quarterly if their monthly payment is $450 or more. Currently, this guarantee values an amount equal to 9.5% of a staff’s available time earnings, but this will increase in the next few years. If you cannot maintain the quarterly payment frequency, then ATO will charge you an SG.
This is another tax that is paid by the business in wages monthly. Relative to the other taxes, the payroll tax is a state or territory-based one. Thus, you will have to pay payroll tax to the revenue office of your state or territory government. Remember, you will require to pay this tax only when the paid wages in a given month will go above a specific threshold value.
Where can you get help?
To get professional help, you can contact Accountant Perth. They can provide necessary assistance in obtaining an experienced small business accountant in Perth.