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Business Tax Tip – Starting a Business – ATO resources to help

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Published on Thursday, 14 September 2017 16:06

The Australian Tax Office (ATO) has plenty of information on starting your own small business. The focus is the less-exciting things – the tax and possible super responsibilities – if ignored they can close your business due to insolvency – inability to pay liabilities. So here are some tips they provide –

When you start a business, there are tax and super responsibilities you need to be aware of, including:

o    the tax implications of your business structure;

o    whether you're entitled to an ABN;

o    registering your business;

o    records you need to keep;

o    deductions you can claim.

We provide information about the key things you need to know and do when starting your own business.

Before you get started

As you get your business up and running, there are a few things you may need to consider, including:

o    when your tax and other obligations start - this will depend on whether you are in business yet;

o    the implications of the structure you choose – tax and legal;

o    the location of your business (such as working from home).

Find out about:

o    Are you in business?

o    Choosing your business structure.

Getting up and running

As soon as your business is running you’re going to face new obligations. Understanding what you need to do from an early stage will help you stay on top of things.

Registering your business

When you start your business there are a number of registrations you need to consider.

See also:

• Registration;
• Streamlining business registration – business.gov.au.

Record keeping

You need to set up a good record keeping system to track your income and expenses right from the start. This helps you know how your business is going, as well as meet your tax responsibilities and be able to claim all the deductions to which you are entitled.

See also:

• Manage your invoices, payments and records.

Hiring workers

If you're thinking of taking on workers it's important to understand you will have extra responsibilities. For example, you may have to:

• deduct tax from their pay and send it to the ATO;
• pay super contributions to their nominated super fund; and
• pay fringe benefits tax if you provide them with benefits in addition to their wages.

See also:

• Your workers.

Reporting and paying tax

As soon as you start up your business, you need to plan for how you will pay the tax you will owe each year when you lodge your tax return.

Paying tax in your first year

In your first year of business, you can stay on top of your obligations by:

• making tax pre-payments into your tax bill account;
• putting money aside for your expected tax bill;
• voluntarily entering into instalments.

See also:

• Make a tax pre-payment;
• How to start paying by instalments.

Paying tax by instalments

Once you lodge your first income tax return and report a tax-payable amount above a certain threshold, you will automatically enter the pay-as-you-go (PAYG) instalment system.

If you voluntarily enter into instalments prior to lodgment of your first tax return, you will be able to make quarterly payments towards you tax bill.

See also:

• Pay as you go (PAYG) income tax instalment.

Reporting

Once you’re up and running, you'll need to report your business income and other tax information. The key reports you should be aware of are:

• Business Activity Statement (BAS)  -
  • the main taxes you will report on will be GST (if you’re registered for GST),
  • any tax you withhold from employees’ pay,
  • instalments towards your own tax once you are in the pay as you go instalments system.
• Income tax return  -
  • to report your personal and business income and claim deductions.

Most of your business reporting can be done online.

Next steps:

• Lodge online (using my Tax – for sole traders);
• Online services – Businesses;
• Business activity statements (BAS).

Tax basics for small business video series

If you are starting a new business, or already running one, this series of short videos will help you understand your tax and superannuation obligations.

The series follows a landscaper operating as a sole trader (Jason); two web designers in a partnership (Fiona and Greg); and a café owner running her business through a company (Mary) as they take you through some of the tax issues they came across when they started their business.

Watch: the short videos at Tax Basics for Small Business, that explain what the series of videos are about and how they can help you.

Need help? Not sure? New or just Starting in Business?

Call for FREE30min advice / strategy session today!

Call 0407 361 596 Aust

Call for FREE 30min advice 0407 361 596

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