This week we are looking at four common mistake we see business owners make with their GST.
Not planning ahead
We recommend putting money aside for GST payments. This will help with cash flow in the following year. It is best to keep it in a separate account. A good suggestion is to put aside 15% of your taxable supplies. Any excess funds may help pay for any income tax liability that arises.
If you don’t pay your GST on time you will have to pay penalties and interest on top of what is owing.
Registering for GST too early or too late
You have to register for GST as soon as you think you will earn more than $60,000 in a 12-month period. But you may want to register earlier so you can claim back GST for costs incurred when starting your business to assist your cash flow. If you are a startup and need advice on this, please contact us.
Not claiming business purchases paid from personal accounts
When buying assets for business use, you can claim a GST deduction, if the asset is 100% for business purposes. When you buy something using your personal account for the business, it might be missed from the business records, resulting in the GST claim being missed.
Confusion around leasing and hire purchase
When you are buying assets or equipment, you can claim GST when the asset is purchased. But if you’re leasing or hiring an asset, the GST is claimable on each payment. There are many different types of leasing deals out there, so it is important to read the fine print.
If you are introducing private assets into the business and are GST registered, we recommend you contact us, as the GST claim is not straightforward.