While you can readily ask the assistance and advice of your Melbourne accountant on GST, as business owners, it is important to have a basic understanding on the different strategies available to bring GST under control, especially among start-ups and small businesses.
Your Melbourne accountant will tell you that all businesses that generate less than $75, 000 total income every year is exempted from charging GST. It is important to note that this does not necessarily mean you should avoid the collection of GST.
If you are keen on earning more than the specified threshold, it is would be a smart idea to start with the end in mind. What does this mean? Keep in mind that most of your clients are expecting to pay GST. This is specifically important if the nature of your business involves products or services to other types of businesses. These entities are known not to generally factor in GST into their budgets, business plans and costs.
You should also consult your Melbourne accountant whether it would be beneficial to claim GST in the very same quarter it was incurred. This is best applicable to entrepreneurs and soloists with operating costs form a significant percentage of their income.
You will be able to claim GST as an operating expense in your tax return. However, note that this will not have the same impact compared to claiming it all back at the end of each quarter.
Any seasoned Melbourne accountant will suggest a practical way of managing GST is to be fully aware that the GST you have collected is not your money. This is something that should be remitted to the ATO. To avoid cash flow problems, it is generally advisable to keep a separate bank account for GST you have collected so it will not be included in your cash flow.