GST or goods and services is tax levied on most goods and services sold and used in Australia. If you are an entrepreneur who is planning to start their own business, you have to know how GST affects your business so you could incorporate it to your business plan. The GST rate is 10%, though not all food products and services should be levied with the 10% GST.
Before you open your business, you have to do your research about GST and whether the product or food that you are offering must be sold with GST. GST affects your business through:
Product and or service pricing
Taxation affects every business’ costs since taxes are imposed on businesses that start making profit. Once a product or a service is availed by a consumer, a part of the profit must be paid to the government. As a business owner or entrepreneur, you must add the 10% GST price to your product and or service pricing.
Otherwise, you would not be able to make a profit if you did not consider the 10% GST that you need to pay back to the government. Even before your business takes off or starts making profit, you must know how to register for GST because failing to do so might cause you more problems in the future.
Paying the tax money to the Australian Taxation Office
Australian Taxation Office is a government agency that is in charge of administering the taxation system in the country. As a business owner, it is your responsibility to remit the goods and services tax that you have collected from your customers after they have availed of the products or services that you are selling. Fortunately, ATO made registering for GST, easy.
It could be done online, by calling a call centre or through the business’ registered BAS or business activity statement upon registering your business. GST registration is only done once even if you have multiple businesses. You have to have a system to make sure that you are able to manage your GST liability. The tax you have collected must be put aside and equitably paid to the Australian Taxation Office.
Applying for rebates
Rebates or GST credits are the amount that you could get as a refund from the Australian Taxation Office. This is the amount that is included in the products and or services that you, as a business owner, availed for your business’ day to day operation.
Although you could only avail of these GST credits if your business is registered for GST. Claiming for these credits could be done by the end of the year. The credits would be deducted from the GST that your business needs to pay the ATO. If the credits you have collected from your purchases is significantly higher than the GST your business collected, you will be able to get a refund.
These are the ways how GST could affect your business. If you did not add the tax to your product or service, the tax would come from your capital or be added to your operational cost and might decrease your income. You also have to remember that it is your obligation to pay tax money to the ATO and duly taking note of your purchases for your business could make you eligible for rebates.
