If you plan to start a new business in Sydney, you need to meet all the important financial responsibilities. You have to understand the Goods and Services Tax (GST) and meet the Business Activity Statement (BAS) lodgement requirements. This is important if you have to stay compliant with the regulations of the Australian Taxation Office (ATO). Many new business owners find it confusing to understand BAS and GST requirements. When you have enough knowledge, the entire process of taxation in Australia will appear far less overwhelming for you. Here is a beginner’s guide to GST and BAS lodgement for new Sydney business owners.
What is GST in Sydney?
The Goods and Services Tax (GST) is a tax of 10% applied to most services, goods and other items that are consumed or sold in Australia. If your annual turnover is $75,000 or greater or $150,000 for nonprofit organizations, you may need to register for GST as a business founder. Even if you do not satisfy this threshold, in certain cases voluntary registration can be advantageous, such as in those instances when you want to claim GST credits on your business expenses.
By registering for GST, you will be responsible for adding GST to your sales prices as well as remitting the collected amount to the ATO. It will also let you claim back GST credits on purchases associated to operating your business.
What Is a Business Activity Statement (BAS)?
Business owners use this form to report and pay different types of tax obligations to the ATO:
- GST,
- Pay As You Go (PAYG) instalments,
- PAYG withholding, and
- Other types of taxes
In case you register for GST, you need to lodge a BAS regularly, on a monthly, quarterly or annual basis – depending on your preferences and turnover.
Most small and medium business owners in Sydney like to go for quarterly lodgement. The BAS assists the ATO in tracking the amount of GST that business owners collect from sales and the amount that they pay on business purchases. It helps to ensure remit the accurate net.
How GST and BAS Work Together?
When you register for GST, in every BAS period there will be a proper calculation of the GST that you have collected from your customers as well as the GST that you have paid on your business expenses. If you make a proper distinction between the two, you will understand whether you are entitled to a refund or still owe money to the ATO.
How to Get Started with GST and BAS?
First, you have to register your business for GST through the business portal of ATO. You can do it through your tax agent or via the Australian Business Register, while applying for an ABN (Australian Business Number). When you register, you can get all the necessary details about your BAS Lodgement frequency.
It is important to set up accurate record keeping systems, right from the first day itself. In this way, you can keep track of every expense, receipt and invoice associated to your business. Many business owners in Sydney use accounting software packages like QuickBooks, MYOB or Xero to automate GST calculations and generate reports that can be readily submitted to the BAS.
How to Make GST and BAS Lodgement Easier?
It is important to plan ahead properly, to avoid all the hassles related to BAS lodgement. You should update your accounts regularly and reconcile bank statements, to prevent last-minute worries. It is also necessary to keep digital copies of all your receipts, which can come in handy if the ATO requests any evidence for your GST claims.
You can find it very useful to hire a professional accountant or bookkeeper, particularly during the first year of opening your business. In this way, you can ensure precise BAS lodgement, deal with GST rules and regulations more easily and even find proper ways to improve your cash flow. Many business owners in Sydney prefer to link their accounting software directly to the ATO, for smooth lodgement.
Why GST and BAS Compliance Matters?
With proper compliance, you can not only avoid fines but also show your business as highly reliable and professional. Many clients, lenders and suppliers like to work with all those businesses that have an impeccable record of meeting their tax obligations. By having accurate BAS and GST reports, you can also project a clearer image of the financial health of your business. It can help you as well as other stakeholders to make informed decisions about the investments and growth related to your venture.
Bottom Line
There is no need to worry about BAS and GST. However, you can always feel better with some professional assistance. Get help from a skilled tax advisor from Prowess Business Advisers, and the taxation process can be much easier for you.