Before you start your new business, you need to be aware of the tax implications of your business structure, registering your business, record you need to keep and deductions you can claim.
Registration– First thing you required to do is register your business and get Australian Business Number (ABN). secondly you also need to register your business name, through Australian Business Register. Depending on the nature of the business you may need to register for the GST and other tax obligations. For example, if you start employing people you need to register for pay as you go (PAYG) withholding.
After business setup if you change your address or authorised contact person, you required to update this on ATO within 28 days so that it can be updated to other government agencies. You required to cancel your ABN if you cease business.
Business Structure– There are four commonly used business structures in Australia: 1. Sole trader 2. Partnership 3. Company 4. Trust
It’s important to understand the responsibilities of each structure because the structure you choose may affect:
- the tax you’re liable to pay
- asset protection
- costs.
You’re not locked into any structure and you can change the structure as your business changes or grows.
Reporting and Paying Tax-As soon as you start up your business, you need to plan for how you will pay the tax you will owe each year when you lodge your tax return.
In your first year of business, you can stay on top of your obligations by:
- making tax pre-payments into your tax bill account
- putting money aside for your expected tax bill
- voluntarily entering into instalments.
Record Keeping– set up a good record keeping system to track your income and expenses from the start. This helps you how your business is going, as well as meet your tax responsibilities and be able to claim all the deductions to which you are entitled. Good records help you make sound business decisions, monitor your business health, analyse your cash flow and demonstrate your financial position to lenders, businesses, accountants and prospective buyers.
Under tax law, your records must explain all transactions and be:
- in writing, either on paper or electronically
- in English, or in a form that we can readily access and convert into English
- kept for five years (although some records need to be kept longer).
If proper records are not kept, ATO may impose penalties.
Before deciding which business structure to use, it is important you seek advice. If you are not sure which business structure to use, we are assisting people to maximise their tax refunds and explains, which option is best suits them.
For further assistance, please contact Taxplanners on 1300 000 TAX (1300 000 829), 03 9600 0143 (10 Lines).
You can also visit our office for assistance –
Melbourne CBD – Suite 411-413, Level 4, 343 Little Collins Street, Melbourne
Werribee Office – 88 Watton Street, Werribee, Contact – 03 901 MY TAX (03 9016 9829)