Understanding GST (Goods and Services Tax) is essential for small business owners and entrepreneurs, according to a business expert. The majority of products and services sold or consumed within Australia are subject to the GST tax. It replaced a number of state and federal taxes on July 1st, 2000.
Given the current GST rate of 10%, a good that normally costs $100 will now cost $110. However, depending on how it is advertised, the price can already contain GST.
Contrary to popular belief, GST is not a corporate expense; rather, consumers are ultimately responsible for paying it. Basic foods and healthcare products are just two examples of commodities that are free from GST.
Businesses must use the Business Activity Statement (BAS) to submit the GST they have collected from customers on a monthly or quarterly basis. In the BAS, all sales, GST collected, and GST paid on allowable business costs are recorded. The remaining amount is remitted to the Australian Taxation Office (ATO).
GST can be calculated by either multiplying an item’s price by 10% to include GST or by dividing the entire price by 11 to determine the GST amount. For firms that have registered for GST, tax invoices are crucial because they provide clients with the GST amount they have paid as well as other crucial purchase information.
Businesses can use a variety of technologies to make GST computations and payment processing easier. Comprehensive point-of-sale systems calculate GST instantly, clearly display GST on receipts, and log sales in accounting software.
Square provides top-notch tools for invoicing and payment processing that make it simple for businesses to send tax invoices, accept payments online, and expedite payment collection. This leads to quicker payments and easier record-keeping for GST reporting at the end of the fiscal year.
Small business owners can help their overall financial performance by ensuring compliance and correct record-keeping by comprehending and effectively managing GST.