If you are starting a new business, or you are simply looking to update your knowledge in the area of business tax, you should seriously consider using a firm of tax accountants to assist you. Taxation is a complex area and, with regulations changing on a regular basis, it is nearly impossible for any individual business owner to stay on top of things.
Using a tax professional on the other hand is the only certain way you know you are doing things properly and fulfilling obligations, whilst at the same time ensuring that you are not paying too much tax.
To clarify the situation, let’s take a look at some of the basics you need to understand about the way business tax operates for Australian businesses.
Every Australian business must register for a tax file number and lodge annual income tax returns. In most instances you will also have to apply for an Australian Business Number which must be used to complete activity statements and lodged with the Australian Tax Office on the due dates. These returns ensure that you are paying the correct amount of GST.
If you have employees, or are paying yourself as an employee, you need to record all payments made and include this on your business activity statement. At the end of the financial year you must also lodge a PAYG installment return. This is used by the Australian Tax Office to calculate the correct amount of income tax deductions your business has to pay. This means that you must also register for PAYG withholding if you make payments and have to withhold tax from your employees. These amounts have to be paid quarterly or, alternatively, whenever your BAS is due.
The goods and services tax applies to any business that is carrying on an enterprise where the annual turnover is $75,000 or more. Business Activity Statements (BAS) must be lodged at least annually, although most businesses choose to lodge them quarterly.
If you are in the wine industry or sell luxury cars, you also have to register for the wine equalisation tax or the luxury car tax.
If you are paying your employees any form of benefit, you must also register for the fringe benefits tax. This may require you to lodge an annual fringe benefits tax return, and to pay quarterly installments on your activity statement. Balancing payments are also due to be made on 21 May every year.
One of the most important aspects of taxation is the superannuation guarantee. Although you don’t have to register you must pay a minimum level of superannuation contributions for every eligible employee. This includes directors and contractors in some circumstances. At the moment, the minimum level of contribution is 9% of an employee’s ordinary time earnings.
The complexity which the above matters raise highlights the importance of using a qualified professional to assist you with every aspect of your business. Using a qualified firm of tax accountants is the first step every business owner should take to ensure they set up their operation effectively and efficiently.
By the way, do you want to learn more about Finance? If so, I suggest you check accountants and tax accountants.