Starting a small business in Australia is an exciting venture, but it comes with important tax and superannuation obligations that must be understood and complied with to avoid penalties and ensure smooth operations. The Australian Taxation Office (ATO) provides comprehensive guidance through its “Businesses & organisations” portal to help new business owners navigate registration requirements, Goods and Services Tax (GST), Business Activity Statements (BAS), Single Touch Payroll (STP), and superannuation responsibilities for staff. This detailed guide walks you through these key obligations to help you start your business on the right foot.
Business Registration Essentials
Before commencing operations, you must register your business with the appropriate government agencies:
- Australian Business Number (ABN): Obtain an ABN from the Australian Business Register (ABR) to identify your business for tax and other government purposes.
- Business Name Registration: Register your business name with the Australian Securities and Investments Commission (ASIC) if operating under a name different from your own.
- Tax File Number (TFN): Sole traders may use their personal TFN, but partnerships, companies, and trusts must apply for a separate TFN.
- Register for GST: If your business has a turnover of $75,000 or more, GST registration is mandatory.
Understanding Goods and Services Tax (GST)
GST is a 10% tax on most goods and services sold or consumed in Australia. Key points include:
- Register for GST: Businesses exceeding the threshold must register and charge GST on taxable sales.
- GST-Free and Input-Taxed Sales: Some goods and services are GST-free or input taxed—understand which sales apply.
- Claiming Input Tax Credits: You can claim credits for GST paid on business purchases.
- Collecting and Remitting GST: GST collected from customers must be reported and paid to the ATO via BAS.
Business Activity Statements (BAS)
BAS is the periodic report businesses lodge with the ATO to detail their GST, PAYG withholding, and other tax obligations:
- Lodgment Frequency: Monthly, quarterly, or annually depending on your business size and turnover.
- Information Required: Report GST collected and paid, PAYG withholding for employees, and other relevant tax liabilities.
- Payment: Pay any amounts owed by the due date to avoid penalties and interest.
- Record Keeping: Maintain detailed records to support your BAS reports.
Single Touch Payroll (STP)
STP is a government initiative requiring employers to report payroll information directly to the ATO each time employees are paid:
- Who Must Comply: All employers, including small businesses with fewer than 20 employees.
- Information Reported: Salaries and wages, pay-as-you-go (PAYG) withholding, superannuation contributions, and employment termination payments.
- Benefits: Simplifies reporting, reduces paperwork, and provides employees with real-time access to their year-to-date tax and super info.
- STP-Enabled Software: Use payroll software that supports STP to submit data securely and accurately.
Superannuation Obligations for Staff
Employers must contribute to eligible employees’ superannuation funds to help them save for retirement:
- Super Guarantee (SG): Currently set at 11% of an employee’s ordinary time earnings, payable at least quarterly.
- Eligible Employees: Most employees aged 18 and over earning above $450 per month.
- Choice of Fund: Employees can choose their super fund; otherwise, employers pay into a default fund.
- Reporting and Payment: Super contributions must be reported through STP and paid by quarterly deadlines.
- Penalties: Failure to meet super obligations may result in fines and the Superannuation Guarantee Charge.
Additional ATO Compliance Requirements
Besides the core obligations, small business owners should be aware of:
- Pay As You Go (PAYG) instalments for income tax prepayments
- Fringe Benefits Tax (FBT) for certain employee benefits
- Record-keeping and invoicing requirements
- Registering for other taxes like Payroll Tax depending on state legislation
Tips for Managing Your Tax and Super Obligations
- Use Accounting Software: Invest in reliable software to automate GST calculations, BAS preparation, and payroll processing.
- Stay Informed: Regularly check the ATO website for updates to tax rates, thresholds, and compliance deadlines.
- Engage a Tax Professional: Consider hiring an accountant or tax agent to assist with complex obligations.
- Keep Accurate Records: Maintain organized records of all financial transactions, employee details, and correspondence.
- Meet Deadlines: Avoid penalties by lodging returns and paying liabilities on time.
Conclusion
Starting a small business involves navigating multiple tax and superannuation obligations that are essential for legal compliance and financial success. By understanding and fulfilling your registration, GST, BAS, Single Touch Payroll, and superannuation responsibilities, you set your business up for smooth operations and growth. Utilize the resources and guidance available through the ATO’s “Businesses & organisations” portal, and seek professional support if needed to confidently manage your business tax affairs.
