Registering for GST – 10 Tips for a Smooth Transition

It’s a milestone that’s satisfying to reach, however I see it cause stress for many small business owners here in Australia.

You’ve either been keeping a close eye on your turnover for a while – pushing to get to the $75,000 threshold and preparing ahead of time. Or you’re in the other camp and you’ve taken your eye off your numbers – deep down knowing you’re probably very close to, or over, the threshold. The latter being what I see most.

There’s no need to bury your head in the sand when it comes to GST registration. Yes – it does mean more deadlines with the ATO you need to deal with. But it’s all part of running a business in Australia and the good news is you may only have to deal with the initial GST registration stage once in your business lifetime.

To help avoid the stress of GST registration time, I’ve compiled 10 tips that will help with a smooth transition.

GST Registration – 10 Tips for a Smooth Transition

1. GST is essentially a tax you’re collecting on behalf of the Australian Taxation Office. You collect it from your customers, and pass on what’s left to the ATO after you’ve claimed the GST on your expenses. It’s best to be in the mindset that the GST portion of your sales and expenses doesn’t belong to you. Don’t fall into the trap of making business decisions based solely on the total of the money in your bank account, as some of that money you’ve collected from customers may be on it’s way back out of your account at BAS time (and that always comes around before you know it).
   
2. Consider if you need to increase your pricing to account for the GST you may need to be passing on to the tax office. Review your pricing to ensure your profit won’t decrease once you’ve registered.
   
3. If you haven’t been keeping your bookkeeping up to date regularly, that now has to be a thing of the past. If you’re registered for GST on a quarterly basis, you need at least 3 months worth of bookkeeping kept up to date at a time. Ideally, keep on top of it more regularly to help ease the pain of BAS time. This is one of the positives I see come out of GST registration – business owners make their bookkeeping and finances more of a priority and this in turn leads to a stronger business overall.
   
4. You may need to change how you invoice your customers. There are strict requirements for the layout and information contained in your invoices once you’re registered for GST.
   
5. Yes – the ATO can fine business owners who don’t lodge their BAS on time. And yes – they can charge interest on late payments. Do your best to lodge and pay on time to avoid being on the ATO’s radar of non-compliant tax payers. If you are experiencing difficulties, try to lodge on time anyway and then contact the ATO to make other arrangements for payment.
   
6. You don’t get to pick and choose what services you want to charge GST on. If it’s a taxable supply, then you must charge GST and report that GST in your BAS.
   
7. Reaching the $75,000 turnover threshold for GST registration is not confined to just the 12 months in a single financial year. So you may reach $75,000 in the period from 1st May 2021 to 30th April 2022. It’s up to you keep an eye on your turnover and register when required – not just once you’ve completed your Tax Return for the year and been given the news by your accountant.
   
8. You can backdate your GST registration. So don’t panic if you realise you have reached the threshold – just ensure you get registered as soon as possible.
   
9. You must charge GST on your goods and services from the official date of registration, which may involve amending invoices you’ve already sent to customers and re-sending them if you backdated your registration. But the good news is you can also claim the GST on your expenses from that date too. Your date of registration can be found on the ABN Lookup website, if you’re unsure.
   
10. Lastly, to ensure you have the money available to pay your BAS obligations on time, open up a separate business bank account and regularly transfer money over to ensure you have plenty to cover your new financial obligations to the tax office. Many of my clients do this and it adds an extra level of control and confidence with their finances.

Seeking Help

If you’re seeking the assistance of a bookkeeper for BAS advice, to help you prepare and lodge your BAS or to perform any BAS related services on your behalf, then they must be a registered BAS Agent. In Australia, registered BAS Agents have qualifications and experience, meet the Tax Practitioner’s Board requirements of being a “fit and proper person” and have appropriate professional indemnity cover. They also undertake many hours of professional development each year to stay on top of changes in the industry. Always ask the bookkeeper upfront and confirm for yourself if they are in fact registered by searching on the Tax Practitioner’s Board website.

If you’d like assistance with your Xero Bookkeeping and BAS, we’d love to hear from you.

Email: sarina@festivalbookkeeping.com.au or phone 0421 501 887