Bookkeeping: Robina Bookkeepers, Gold Coast0415 453 536 – MYOB,Quickbooks, Robina, Varsity Lakes, Reedy Creek and Mudgeeraba

Starting a business can be daunting with bookkeeping, GST and ABNs. Take Scott, for instance. He’s just started a carpentry business, which most likely means he’s a carpenter that’s decided to freelance.

He got an ABN (Australian Business Name) and registered for GST, and is now confused between GST and income tax.

To simplify the GST issue.

If you are registered for GST you now become a tax collector for the Government, so every time you invoice a client, you need to add 10% to the invoice.

This 10% extra money belongs to the ATO. It’s not yours to keep. SO put it in a separate bank account.

Every time that you buy a product/service for your business you will see on the suppliers invoice or cash receipt how much GST they have charged you

Rather than sending the 10% on each transaction to the ATO, you lodge a Business Activity Statement BAS (normally each quarter) and tell the ATO that you have COLLECTED $xxx in GST, and you tell them you have PAID out $yyyy in GST

So if you’ve collected more than you’ve paid out in that reporting period then you need to give the ATO their money back

If you’ve paid out more than you’ve collected at the end of the reporting period, the ATO needs to give YOU money back

i.e if you’ve collected $3000 in GST, and paid out (to your suppliers etc) $1000 in GST you owe the ATO $2000

if you’ve collected $1000 in GST and paid out $1500 in GST then the ATO will REFUND $500 in that reporting period

INCOME TAX
This is different. Quite simply you get taxed on all your TOTAL income less any BUSINESS expenses.

If you earn $70k as a carpenter, another $20k from rental properties, and $10k from shares/stockmarket investments, then that’s a total of $100k (the GST part was never yours and is not included here)

If it’s cost you $30k to run your carpentry business (suppliers, subbies, tools etc) and $10k to run your rental properties (loans, maintenance etc) then your expenses would be $40k – so your taxable income would be $60k (less other things like medicare, etc etc, )

This is why small business owners need bookkeepers – to track the GST and income / expenses for your business, or help you set up a bookkeeping system so that you can do the same.

We are not tax agents and cannot give specific advice. Before taking any direction please speak to a professional registered tax agent and do not rely on the example above.

Continuing our Robina bookkeeping series about GST, we’ll discuss about how much GST you can claim.

We’re not registered tax agents and suggest that you contact the ATO or your accountant / tax agent for clarification. Read the rest of this entry »

Our Robina Bookkeepers and bookkeeping service often come across a common pitfall that small business owners make in respect of GST credits. Their supplier issues an invoice that includes GST without being registered for GST

In other words, your supplier has just increased the invoice by 10% – so do you go back and question the invoice amount and request that they issue the invoice without the GST component?

Whether you choose that course of action or not, your supplier must be registered for GST before you can claim a GST credit on a purchase. Ask the supplier whether they are registered for the GST or ring the Australian Tax Office for more details.

For small business owners in and around Robina, Varsity Lakes, Reedy Creek and Mudgeeraba , contact our Robina Bookkeepers and bookkeeping service for help with your bookkeeping.

A common questions that small business owners ask our Robina Bookkeepers and bookkeeping service is whether they should be GST registered

Since we’re not registered tax agents we can only refer you to the ATO website. There you will discover that if you carry on a business, you must register for GST if your GST turnover is at, or above the GST turnover threshold, that is, it is $75,000 or more ($150,000 or more for non-profit organisations).

You must also register for GST if you provide taxi travel as part of your business, regardless of your GST turnover. Taxi travel means transporting passengers by taxi or limousine for fares.

For people who are just starting their small business in and around Robina, Varsity Lakes, Reedy Creek and Mudgeeraba , the ATO advise that if you are not registered for GST, you must check each month to see whether you have reached the $75,000 GST turnover threshold. If you reach the threshold, you must register for GST within 21 days.

If your Robina business is not GST registered, why would you need any bookkeeping doing? This is a great question. Another way to put it is:

I’m not registered for GST – so what records do I need to keep?

The GST is only one component of tax that you need be concerned about. Unless you’ve started your new venture as a hobby, would it be fair to say that you are looking at expanding your income?

If that’s the case, then you should declare that income. Some people try to hide it, but it’s very difficult these days, since the ATO can access bank accounts, credit cards, and payment gateways such as Paypal etc

If you keep all the paperwork, then you can’t go wrong! At the end of the year when you (or your tax agent) lodge your income tax returns, you’ll need to declare the income that you’ve received from your business.

If you’re not sure where to start, the contact our Robina Bookkeepers and Bookkeeping service and we’ll get you on track

Depending on your personal circumstances, there may be some valid expenses that you can claim to offset the income that you have received.

In a typical business this includes expenses incurred in running the business such as rent, utilities (eg power, water, phones etc), office equipment, etc.

Then there’s cost of goods sold, ie if you’ve bought anything to help you sell the products, or maybe you bought them at wholesale and then sell them to your customers

You should keep all the paperwork that you’ve got when buying stuff, and all the paperwork when you’ve sold the stuff, and all the other bills that you’ve paid in the process of running the business

Then either contact a bookkeeper, to sort it all out for you, or go directly to a registered tax agent or an accountant (who’ll give it to a bookkkeper to sort out) and then they’ll tell you whether or not you’ll be able to reduce the amount of taxable income that you’ve incurred in your business.

You could look at trying to keep all the right records yourself, or save yourself time and money by contacting Robina Bookkeepers and Bookkeeping service to help you get started if you’re not GST registered.