If you think that tax is an intrusive part of life as a humble employee, then you may need to broaden your horizons if you're thinking about setting up in business for yourself. You need to look at these impositions in a completely new light and understand a whole new range of three-letter acronyms. While your obligations cannot be underestimated as a new entrepreneur, you shouldn't let such a challenge deter you from your new adventure. Instead, you should get a broader understanding of what's involved and then make sure that you have professionals on your side to help you. Where should you start?
Goods and Services
To begin with, you need to get used to collecting tax for the government and sending it in at regular intervals. This means that you will have to apply goods and services tax, or GST, to products and services that you supply. There are various rules that govern when and how you should apply this tax that vary from industry to industry, and you may not need to register in your early days. However, as you grow and revenues increase, you will be introduced to GST in all its glory. Bear in mind as well that you can register voluntarily on day one so you can claim back tax that you spend to acquire your equipment or machinery.
You'll also need to collect taxes from your staff by deducting this sum from the gross amount of wages or salaries. You will then need to send this into the tax authorities either per month or per quarter, depending on your business size. All of this information has to be included on the form with the next three-letter acronym, the BAS.
Your business activity statement is sent into the ATO so that they know where the tax originates and how much you are going to submit. You will deduct any taxes incurred through your own purchases on this document and show the net amount at the end. Once again, rules dictate when you should send this paperwork in, and it could be annually, quarterly or monthly. If part of your business requires you to import goods, however, then the government will want to see this form every month.
Details and Accuracy
You may be required to account for other taxes depending on your chosen sector and line of business. However, you should always ensure that the details submitted are fully accurate and comprehensive, as the last thing you want is an unwelcome visit from a tax inspector.
Over to the Experts
As you have so many other things to worry about in the early days, you should engage the services of an accountant to deal with your tax-related issues anyway. They will be able to provide advice at every stage to help you get up and running effectively.