Friday, 15 February 2013

Starting a business – tax and legal obligations

This is definitely not a topic to read prior to Friday night drinks.  The Millionaire on Heels highly recommends that you consult a professional to discuss your tax and legal obligations.  To help you out with your initial meeting with said professional, here are a few topics you may wish to discuss.

Tax obligations

Everyone likes to tax a new business.  Various federal, state, and local government taxes and rates can apply to your business, depending on its size and location.

Federal government taxes that can apply to your business include the Goods and Services Tax (GST), Pay As You Go (PAYG) withholding tax, and Fringe Benefits Tax (FBT).  I discussed the process of registering for these in my post http://www.millionaireonheels.com/2013/02/starting-business-registering-for-abn.html.  Excise duties also apply to certain types of businesses.  And capital gains are subject to the Capital Gains Tax (CGT).

Under Australian tax law, you are required keep records of all your business transactions, including income tax, GST, payments to employees, and business payments.  Various activity statements are used to report your tax obligations to the ATO, including PAYG withholding, FBT, and GST, and to pay deferred company and superannuation fund installments.