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GST… the real cost to a business 

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Goods and services tax, or more simply GST, was introduced by the Australian Government on 1st July 2000. It is a 10% tax on most goods and services provided in Australia. It was introduced with the idea that the end consumer would ultimately be paying the tax.  

So how much does this GST cost my business? 

The concept is that a business isn’t affected by the cost of GST. A business who is registered for GST collects GST on their sales and this amount is payable to the Australian Taxation Office (ATO). Any GST which has been paid on any purchases / expenses reduces the GST payable to the ATO. If a business’ sales GST exceed its purchases GST, then you pay the difference to the ATO, if your sales GST is less than your purchases GST, then you receive a refund from the ATO.  

Easy right?? Well what about the cost of calculating the GST amount payable or receivable? In most instances a business will need to employ an Accountant or Bookkeeper to deal with this. It can become complicated when there are those transactions that don’t have GST at all. Add to that the monthly or quarterly Business Activity Statements (BAS) to be submitted.  

Another cost is the expense of needing an accounting program that will deal with the calculation of GST.
Although not a necessity, a business with a high amount of transactions benefits greatly from having one.  

What if a business isn’t registered for GST? The business in unable to collect GST on their sales and therefore unable to claim back the GST on purchases from the ATO. They therefore become the end consumer and must ensure that they have allowed for that GST in their margins. 

If a business’ turnover (sales) reaches $75,000 within a 12 month period, they must register for GST. They also must be registered for at a minimum of 12 months.  

So what about those business’ that weren’t required to be registered for GST, then their sales reach $75,000 in a 12 month period? They can fall into the trap that they are unable to increase their service or product price by 10% but are required to by law. Suddenly their profit margins are reduced by the amount of GST payable to the ATO. Yes, they can now claim a deduction for the GST on their purchases, but that should definitely be well under the GST applicable on their sales. The market determines rates in a large number of industries and when your market consists of individual consumers, not GST registered business’, it can be very hard to increase your price 10%. Now the business needs to absorb the GST cost into their profit margins along with the administration costs associated with it.  

To say a business isn’t affected by GST as they are just collecting it on behalf of the ATO couldn’t be further from the truth. 

A Great Bookkeeper

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A great Bookkeeper will keep you informed regarding your financial position.

A great Bookkeeper won’t hesitate to show you the business’ financial reports and explain them to you in detail.

A great Bookkeeper will ensure that you are aware of any issues that arise.

A great Bookkeeper will work with you, not against you to achieve your results.

Do you have a great Bookkeeper???


Starting a new Financial Year less stressful

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Starting a new Financial Year is a great time to turn over a new leaf. As a local Croydon Bookkeeper, we are here to ensure that you get the best start. Having a professional take over your books takes the stress away from you and allows you to concentrate in the areas that make you more revenue. If you think about how much you could make per hour for your business and compare that to how much you are paying a Bookkeeper, you generally should find that you will be ahead by outsourcing your books. So instead of wasting those hours attempting to do your own books, use that time to generate more business. It’s basic maths really.  Don’t get caught up doing the jobs that are costing your business just because you don’t want to pay somebody to do it. While you are doing it those jobs, you aren’t making any money.

Annual Taxable Payable Reports Due

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Annual Taxable Payable Reports are due by the 28th of August. This is a compulsory report to be completed for those in the building and construction industry who use contractors. Examples of those trades which need to comply are; Electrician, Plumber, Builder, Brick layer, Carpenter, Cabinet Making, Cable Laying, Plastering, Painting and Landscaping to name only a few. For more information on those needing to report, refer to: https://www.ato.gov.au/Business/Reports-and-returns/In-detail/Examples-of-building-and-construction-services/. We are a Croydon Bookkeeper that is more than happy to help you complete this.

Financial Year

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Coming up to the end of the financial year, ensure you have your books up to date and ready for you tax agent. Having your financials accurately prepared will save your tax agent time and hopefully your bank account!! We are a Croydon Bookkeeper that is more than happy to help you get things sorted.

BAS Tips

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Falling behind on preparing or paying your BAS, the longer you leave it, the harder it becomes. Always lodge your BAS on time and talk to the ATO regarding payment. It is more beneficial to lodge it and avoid late lodgement penalties.