Do you or don’t you? One of the biggest ponders in life and in business. As a business owner, core business decisions rest with you. One I see quite often is, do I or don't I register for GST. This question commonly comes from those who are in the start up phase of their business or who have a business on the side. Many are often confused on the whole GST registration and many assume that if their current business income is below the $75,000 threshold then GST doesn't affects them. But does it?
Well it comes down to two key things: perception and the plan.
A maker or breaker in the business world.
It is all about how your customers and potential customers see you. If your customer is one that would naturally assume you would be registered for GST, example business to business transactions or perhaps you deal with the larger end of town or are in a particular industry, it can be in your best market interest to voluntarily register for GST. Why? You will be taken more seriously… Seriously.
Currently businesses are required to be registered for GST when the business income is more than $75,000 per financial year. Now that’s money in the door before expenses. From a business sense, $75,000 isn’t a lot and is usually a one person operation or a business that isn’t full time. Regardless of what applies to you behind closed doors, how do you want your customers to see your business?
What do you have store for your business? Do you intend to grow, expand and transform your business? Make it your main gig? (For those of you who have a side business).
Well, most likely the business income will tip over the threshold and GST registration will be inevitable. So what happens when that day arrives? It’s not pretty…
- Updates your accounting software – okay
- Additional reporting to the ATO - not so bad
- Changes to your income – HANG ON!!!
The challenge is how do you adjust your price to account for GST? Add it on or adsorb it to your current prices? How will customers respond and how will it affect your bottom line?
For those in industries lucky enough to avoid GST on sales, being GST free, there is no customer impact. But you are still required to be registered and will have the additional ATO reporting. You can however, enjoy in GST credits on GST applicable business expenses.
So what now?
Have a feeling GST will impact your business at some point in the future? Consider setting up now with GST in mind. It means that you are set and ready to go with the big picture in mind! No matter if you have one customer or a hundred, there will be one less question to ponder… Do you or don’t you register for GST. You’ve got that one sorted!
The above is intended as a guide only. Seek professional advice for your own personal circumstances. Limited liability by a scheme approved under Professional Standards Legislation