Get a better understanding GST and how it applies to your small business with this visual guide.
Setting up a business can be tricky at the best of times without the added headache of spending thousands of hours trying to understand the complexities of GST legislation you must comply with. Over the next few weeks I’m going to be breaking down all the essential elements of GST into an easy to use, simplified GST guide for small business. All the hard bits will be illustrated (as we’re only human after all and visualizing concepts is the best way to learn) for your viewing pleasure.
At the end of this guide you will have mastered the basics of GST.
Keep checking back on this blog (or better yet subcribe) to follow the journey! That way you can learn gradually, over time, without boring yourself to death, or straining your cranium too greatly in one sitting! Most of the information discussed in this guide is sourced from the Australian Government’s GST for small business guide. For those interested the ATO’s website on GST for the most current information is here.
Let’s start slow, with two simple examples this week breaking down some very basic situations.
First we must ask “What is GST”. The Goods and Services Tax in a nutshell is a tax of 10% on most goods and services in Australia. Generally registered businesses include GST in their sales to customers, and can claim back GST on items purchased.
Let’s have a look at an example of how the above could actually apply:
As you can see, it is ultimately the consumer who pays all the GST due. The lumber company, toy manufacturer and retailer all can claim GST credits and on-charge any GST that they have to pay up the chain.
Let’s have a look at another example.
GST FOR SMALL BUSINESS
In this example a company has quarterly sales and purchases.
At the end of the quarter the business nets the GST owed on sales to the Tax Office against its GST credits from purchases.
Hopefully this gives you a very small teaser as to the type of easily digestible, visual information we’ll be producing here over time.
Next week we’ll be looking at registering for GST. Which small businesses need to register, what is GST turnover, and how does one easily work it out?
This is all crucial information to understand on your path to becoming an Australian small business GST guru!
Has this article whet your GST appetite? Continue reading to week 2: The illustrated guide to registering your business for GST
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This guide does not constitute professional advice in any way, please speak to your accountant or advisor for specific GST and financial enquires.
Has this article whet your GST appetite?
Continue reading to week 2: