Get to know the ATO. You may have heard about them but how do they impact your small business?
The ATO stands for the Australian Taxation Office. It is the government's principal revenue collection agency. You would have crossed paths with the ATO each year while submitting your tax return.
But as a small business owner, you will need to think about additional financial responsibilities before you can start making money. From GST to superannuation. PAYG withholding to voluntary repayments. Sometimes it can feel a little overwhelming.
Here are our top 5 business owner responsibilities we recommend you get on top of:
Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold in Australia.
Need a primer in GST? Visit the Honcho beginner’s guide.
As a business owner, it’s your responsibility to register for GST if your annual turnover is $75,000 or more. Honcho can help get you GST registered within 24 hours.
Once you’re GST ready, you’ll be entitled to claim GST credits for all business-related purchases.
Will you have employees? Pay As You Go (PAYG) withholding is a compulsory business owner responsibility. PAYG is a portion of your employee’s salary that is withheld and sent to the ATO. PAYG helps prevent your employees from having a large amount of tax to pay at the end of the financial year.
Sounds complicated but don’t worry, it is really simple. You will report and pay PAYG to the ATO through a business activity statement (BAS). Check out our unjumbling acronyms article on BAS for some helpful ways to submit your BAS on time.
Superannuation is money set aside over your lifetime to provide for your retirement. Usually, a company will make regular super payments from their employees’ income. But if you're a sole trader, business owner or in a partnership, you don't need to make payments for yourself. However, you may want to make a personal contribution as a way of saving for your retirement.
Compulsory And Voluntary Repayments
Study loans are a lifesaver as a student, but are daunting to pay off once you have entered the workforce. If you have taken out a study loan from the government, the ATO will work with you and your employer to ensure the loan is slowly paid off - at a time you can afford.
One of the great ways they do this is through compulsory repayments. Small compulsory repayments will be taken out of your paycheck each month once your total income reaches over $51,957 for the 2018-2019 financial year. This way you don’t have to worry about the loan. The general rule of thumb - the more you earn, the higher your repayment.
On the other hand, if your total income is less than the threshold, but you want to get a head start, you can make a voluntary repayment to the ATO. For example, if you are a junior freelancer you may choose to make voluntary repayments to reduce the balance of your debt.
Update Your Details
To round out our top five, the last business owner responsibility is keeping your details up to date. This includes business activity, address (postal/email), and contact details. Yes, circumstances changes. But it is important to tell the ATO within 28 days of any changes in your registered business details.
Honcho can help you update your details over the phone, even when the ATO is closed. You can call one of our friendly business specialists on 1300 550 730 from 8am to 11pm (AEST), 7 days a week.
Honcho Hint: Honcho works with the ATO so you don't have to. We minimise the number of hoops you need to jump through to get your business off the ground.
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