Small Business Series – Part 5: Tax registrations for new business owners
Thank you for joining us again in our Small Business Series about starting a small business.
In this post we will talk about the tax registrations. Whichever business structure you have decided on (see previous post {link here}) there are some essential business registrations you will need. Please keep in mind that the information in this post and our Small Business Series is general in nature and does not take into account your personal circumstances.
Australian Business Number
Every business in Australia needs an Australian Business Number (ABN). This is regardless of the size of your small business.
If you are using a partnership, company or trust structure, these entities will require their own ABN and Tax File Number (TFN).
Tax File Number (TFN)
A TFN is a unique identifier issued by the Australian Taxation Office (ATO). It is a confidential number and you should never share your TFN via email or other unsecure means.
Goods and Services Tax (GST)
GST is a 10% tax on most goods, services, and other items sold or consumed in Australia. You need to register for GST if your annual turnover (sales income) is $75,000 or more.
Once registered, you’ll need to include GST in your pricing, and you can claim GST credits on purchases related to your business. You will need to submit quarterly Business Activity Statements (BAS) to the ATO to report and pay your GST.
Katie (from our ongoing case study) has applied for her ABN but knows she will not reach $75,000 in sales in her business this financial year so won’t be registered for GST. Katie will monitor her sales income throughout the year as she knows once she estimates her turnover will be over $75,000 for the financial year she will need to register for GST and start submitting a quarterly BAS.
In our next blog we will look at record keeping and accounting systems. It is only with good systems in place that you can track your income and expenses (and GST collected and paid if you are submitting a BAS).
While it’s possible to handle many financial and tax tasks yourself, engaging with a trusted adviser at LCB Accounting Solutions can be a smart move, especially as your business grows.