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  • #974133
    samdwyer
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    If I have a small business does the money I earn need to be taxed due to income tax. From what I’ve read i will not need to pay GST until I earn over $70,000. Furthermore, if I spend the profits, and some, one marketing and run the business at a loss, will this negate the income tax i will have to pay.

    #1066217
    taxpert
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    samdwyer, post: 82200 wrote:
    If I have a small business does the money I earn need to be taxed due to income tax. From what I’ve read i will not need to pay GST until I earn over $70,000. Furthermore, if I spend the profits, and some, one marketing and run the business at a loss, will this negate the income tax i will have to pay.

    Hi all,

    I’ve some how managed to survive another end of financial year and thought I’d get beck involved in these forums. Hope the other accountants here had a good 30th of June.

    Sam, assuming that you are in business (and not just partaking in a hobby) then and that busines makes a profit then yes you will need to pay income tax. How that tax is calculated depends on what legal structure the business uses (e.g. is it a company, a sole trader etc).

    If the business makes a loss then that loss will likely be carried forward to offset future income earned by the business. I am speaking generally here as once again the rules on business losses are different from structure to structure. If you give me more information about your circumstances I can go into more detail.

    You don’t need to register for GST if your current and projected (expected) annual turnover is below $75,000 though it is possible that you may want to register voluntarily. There is a good article on GST somewhere on this site.

    Cheers,

    #1066218
    samdwyer
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    Thanks heaps,
    And it’s a website myself and a partner are putting together. It has potential to make a reasonable income, and we’ve had a little bit of interest in sponsorship thus far, however there is no gaurentee that it will take off. But I just thought I’d make sure I’d cover my bases.

    #1066219
    FiTi
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    Hi Sam,

    We use Urs Meisterhans from Swiss based company Sinitus, we’ve also used . He’s an expert in the market and small business.

    I’ve also had experience with Credit Agricole and Wells Fargo who were pretty good too. Though I suggest getting in contact with Urs Meisterhans for your Tax advice and planning strategies. Hope you get on top of your tax sooner rather than later!

    #1066220
    Trevor Monaghan
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    Hi Sam,

    You don’t need to be registered for GST until your “taxable supplies” are expected to be greater than $75,000. This does not include exports which are not taxable supplies in case that’s a factor for you. As Simon alluded to, you may still want to be registered for GST even if you don’t have to be. If you are making a loss at the moment then you might be entitled to GST refunds on the GST you are paying your suppliers, but you have to be registered to claim.

    You would also want to be registered for GST if you don’t want your customers or suppliers knowing how small you are. That is, you can’t go around telling people you are successful, then issue them an invoice without GST…not a good look! I see a lot of this happening and you lose all credibility.

    If you decide to not register for GST, cover yourself by putting together a budget showing your expected income to be less than $75,000 for the next 12 months. If you end up going over the $75,000 and the ATO challenges you, it would be nice to pull out the original budget as proof that the turnover was higher than you had actually anticipated.

    Good luck with the business!

    Trevor Monaghan
    Chartered Accountant
    Climax Business Strategies
    http://www.climaxbusiness.com.au

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