How Do You Account for GST in Your Business?

 GST-registered businesses need to issue tax invoices to their clients, gather GST and send it to the ATO with their business activity statement (BAS). There are certain ways you can make this easier to manage:

  • Use business accounting software to generate tax invoices and automatically generate reports of your GST liabilities and credits at BAS time.
  • Deposit the GST you collect into a separate bank account.
  • Take advantage of the cash accounting option to better match your GST liabilities against your business cash flow.



Paying GST and Your Cash Flow

GST-registered businesses charge and collect GST. If the collected GST is more than the GST credits you are claiming, you send the difference to the ATO with your business activity statement. Most businesses do this every three months. It is crucial to put aside the GST you collect to meet your obligations. There are some ways you can easily manage your GST liability. You can also engage a professional tax accountant near you by searching and hiring a ‘small business accountant near me’.

Most small businesses can have two ways to work out the GST in their activity statement: the calculation method or the instalment method.

  • Instalment method

If your business income remains consistent throughout the year, you may like to pay a GST instalment amount. This amount is calculated by the ATO depending on what you paid in the previous income year. It means your quarterly payment is always the same (you can change the amount if the situation changes), so you know how much you need to put aside. You then declare your actual GST sales and purchases on an annual GST return.

  • Calculation method

The calculation method would be the ideal method if you notice fluctuations in your business income. This means you work out the GST on your sales and purchases every quarter when completing your business activity statement.

Choice of An Accounting Method for GST

There are two accounting methods used for GST: a cash basis and a non-cash basis (accruals). The method you use will impact when you report GST. Businesses with a total turnover of less than $10 million, or that use cash accounting for income tax, can use any method. You can also seek advice from a tax return accountant to make the right choice.

Conclusion
Understanding the accounting method for GST is crucial for all types of businesses. You can get in touch with Reliable Melbourne Accountants to stay informed about which accounting method for GST is ideal for your business.



Comments

Post a Comment

Popular posts from this blog

What is a 401k in Australia? 401k Vs Superannuation

Image
  Every country has its own retirement saving systems when it comes to retirement planning. If you know about 401k, then we’ll discuss what is similar to 401k in Australia. Let’s get started: What is a 401k in Australia? A 401k is a retirement savings approach used in the United States. It is a plan offered by employers to their employees. With this scheme, individuals can contribute a portion of their pre-tax income into a retirement account. These contributions are usually invested in different investment options, such as bonds, shares, and mutual funds to increase the funds over time for retirement. Now, the question arises, what about the retirement system in Australia? Well, Australians rely on a retirement system called superannuation for their retirement savings. This scheme offers numerous benefits that’s why it is one of the popular choices among Australians. Many employers use super as a primary part of their remuneration packages, retaining and attracting employees by co...
Read more

tax accountant near me

Image
  Are you lodging your tax return for the first time? If yes, then you must know why and how you can prepare and file your tax return for the first time. You can file your tax return on your own if you know the criteria to lodge, otherwise, it would be beneficial to seek help from a professional   tax return accountant . In today’s blog, we’ll discuss how a tax accountant can help you lodge your tax return.  Let’s get started: Why Do You Need to Lodge Tax Return? The ATO needs to know how much you earned during the financial year and what deductions you are eligible to claim. This information indicates whether you need to pay extra tax bills or you need to get a tax refund. If you are not aware of the lodgment process of tax returns, then you can ask an  accountant in Melbourne . Registered tax accountants can help you prepare and lodge your tax return on your behalf. If you are lodging a tax return on your own, then you can use myTax, otherwise, you need to seek hel...
Read more

When Do You Need to Report and Pay GST?

Image
  If your business is registered for GST, you must send tax invoices to your clients, gather GST and send it to the ATO with your BAS. There are a few ways you can easily manage: You can get help from a tax accountant who is well-aware of using business accounting software to generate tax invoices and reports of your GST liabilities and credits. By accessing accounting services in Melbourne for your business, you can be sure to report and pay GST on time to avoid penalties. Put the collected GST in a separate bank account. Use the cash accounting method to match your GST liabilities with your business cash flow. When to Pay GST? The GST reporting cycle may be monthly, quarterly, or annually, based on the turnover of your GST and other requirements. Monthly GST reporting If your company’s GST turnover is $20 million or above, you are liable to report and lodge your GST monthly and file your BAS. The ATO also needs some other businesses to report GST monthly. Other companies can rep...
Read more