The Taxes Affecting Small Businesses

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Small business owners have to account for a number of taxes to the Australian Taxation Office in line with the tax legislation affecting small businesses. You’ve got to account for the income tax payable on your business, the GST or Goods and Services Tax and superannuation in keeping with the Australian taxation system. You’ve got to lodge your BAS or Business Activity Statement and the corresponding GST every quarter or risk stiff pecuniary penalties.

Goods and Services Tax - GST

The GST was introduced on 1 July, 2000 and is applicable to all business entities which are registered for GST. The Australian Federal Government levies this 10% tax on almost all the supply of goods and services by Australian companies. Your services will be free from GST if you’re an educational establishment or if you export your goods outside Australia as the GST is only applicable on anything consumed within Australian boundaries.

If your business is registered for GST, then you have to account for the 10% GST in the invoices and bills to your customers. GST is calculated as 10% of the value of the goods and services you charge your client. Your customer pays you the GST element. When you purchase inventory from your suppliers, you pay GST over to your supplier for the items bought. You can claim a GST credit on your business expenses.

Every quarter, you’ll need to pay any difference between the GST your business suffered and the GST charged to, and paid by, your customers, to the Australian Taxation Office. You’ll obtain a refund for any tax credit owing to you. If your establishment only provides GST-free goods and services, then you will not have any GST to pay to the Australian Federal Government. Instead, you’ll be claiming a lot of GST tax credits.

Most small businesses will invoice their customer for the GST element and must therefore keep proper records of their obligation to pay the net difference to the Tax Office. In this regard, your bookkeeper is well equipped to handle the meticulous and precise documentation necessary to accurately calculate the GST collected from customers and GST paid to vendors. When you lodge your quarterly BAS, your bookkeeper will ensure your GST obligation is paid over to the Taxation Office. You cannot afford to take this business obligation lightly as the failure to account for, and pay, the GST constitutes a breach of Australian Tax Law which the tax authorities will not view sympathetically.

Payroll Taxes

As long as you employ a workforce to whom you pay regular wages, you have to account for payroll taxes to your state government. The tax payable is dependant on the wage cost. Payroll taxes differ between the various states in Australia. However, the payroll tax is only payable once your total wage cost exceeds the threshold. For example, if you run a construction business in Sydney, New South Wales and you’ve paid wages exceeding the threshold of $623,000 then you must pay over 5.75% of this amount, or $35,822.50, as payroll tax to the NSW state government. If your business is located in South Australia and you’ve got a wage bill in excess of $522,000 for services performed by your employees within the South Australia state boundaries, then your business is liable to a Payroll Tax liability.

Pay As You Go or PAYG

The Pay As You Go, or PAYG, withholding tax became enforceable in Australia since July 2000. You have to calculate and deduct the correct amount of PAYG from the salaries and wages of your employees. You withhold this tax element from the regular payments that you make to your employees. You first calculate an annual income based on either weekly or fortnightly payments and you then withhold the necessary tax portion from the wages of your workforce. You pay over this tax to the Australian Taxation Office. Hence your employees will receive their wages nett of PAYG.

It’s important that you withhold the correct amount of tax from your employees and forward this to the Taxation Office. If you fail to account for PAYG, this would amount to a transgression of Australian Tax Law. Your business will face still penalties in addition to having to pay the necessary amount to the tax authorities. To avoid the possibility of miscalculating the PAYG and failing to make the payments when due, you’ll need competent outsourced accounting services to assist your business in meeting your tax obligations.

Supperannuation

As Australian Superannuation is compulsory for all eligible Australian employees, this is a necessary cost that must be borne by employers. You must contribute the employer’s portion of superannuation, called the super guarantee, to the fund as part of your statutory obligation. The superannuation must be carefully calculated at 9% of each of your eligible employee’s ordinary earnings to ensure that the correct amount is paid as contributions into the fund. You have to make the payments by the quarterly cut off dates.

Income Tax

Your business will suffer an income tax on your profits for the financial year. This is assessed when you lodge your annual tax return. In order for you to be able to lodge accurate tax returns, your bookkeeper must maintain correct accounting records and year end financial statements. Your income tax return is compulsory and is completely different from your BAS.

How Your Bookkeeper Assists You In Tax Matters

The crux of meeting your various tax obligations is for your business to maintain good and accurate accounting records. Your bookkeeper will ensure that your transactions are recorded in a timely manner. Your bookkeeper will also make sure all your accounting entries are correct and up to date.

Here is where Bookkeeping Central will play a critical role in ensuring that your business meets its tax obligations on time. With expert bookkeeping professionals to provide stellar accounting services, you can rest assured that your business will be in good hands with Bookkeeping Central and your PAYG, superannuation and GST are duly paid to the Taxation Office on time.

Article Source: http://depositarticles.com/

Bookkeeping Melbourne Bookkeepers For Small Business

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