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Don’t get penalised for something silly like not accurately recording your income. As a startup, you are responsible for ensuring you meet all your business GST obligations.*
Here are the top four mistakes startups make, and how to avoid them, according to Tony Greco, General Manager, Technical Policy, Institute of Public Accountants.
Ask yourself whether you’re going to be profitable straight away, making more than $75,000 per annum in your first year. If you answer yes, then you are required to register for GST and lodge your BAS statement.
“Tax compliance is part of doing business and should be just as high on your priority list as running your business and becoming profitable,” says Greco.
You may be too busy running the day-to-day, so if you don’t want to do it yourself, make the decision to partner up with someone who can pay attention to that aspect of the business, rather than not think about it at all, explains Greco.
However, make sure you need to lodge a BAS statement before spending too much time on it.
“Some startups may take quite a long time to get funding and they’re not doing much invoicing. If you’re not going to reach [$75,000] in the year ahead, you don’t need to register for GST,” says Greco.
If you’re registered for GST you need to lodge a BAS for each agreed reporting period, either monthly or quarterly. The due dates for monthly reporting are typically the 21st of the following month. Quarterly lodgement dates are on the 28th of February, April, July and October.
If you don’t submit on time, you’ll receive a failure to lodge penalty of $180.
A common mistake is claiming GST on things where there was no GST in the first place, says Greco.
Don’t assume everything has GST – bank charges, paying wages or sometimes registration on motor vehicles do not have GST, he says.
If your accounting systems haven’t been set up properly, coding errors can creep in where inappropriate expenses are going into the wrong accounts.
“It’s recommended you have an accountant or bookkeeper if you’re not comfortable with coding, understanding how GST works or deducting tax from pay packets. Leave it to someone who can do that administration and compliance for you.”
If you want to prepare an error-free BAS:
Written by Thea Christie
*This material does not take into account your personal and financial needs and/or circumstances, and you should seek appropriate advice (which may include property, legal, financial and/or taxation advice) before making any decisions or acting on any of the information contained in this material. To the extent permitted by law, all members of the ANZ group of companies disclaim liability or responsibility to any person for any direct or indirect loss or damage that may result from relying on the information contained or this site, or any act, omission or error, by any person in relation to the material contained on this site.
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