FAQ

Frequently Asked Questions about Business, Accounting Services & Tax

Our team often get asked many questions about business issues like taxation, GST registration, BAS, bookkeeping requirements and our services. It’s natural to have questions so below you will find a compiled list of frequently asked questions to help you. Simply click on the question below to read the answers:

What Steps are Involved in Starting a Business?

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What are the steps required to employ my first employee?

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Do I Have to Register for GST?

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What Tax Records Do I Need to Keep for My Business?

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What Is a Business Activity Statement?

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What’s the Difference Between an ABN and an ACN?

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Do I have to include GST on my Invoices?

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Starting a business involves several key steps:

  1. Choose a Business Structure: Decide on the type of business structure, such as a sole trader, partnership, company, or trust.
  2. Register a Business Name: If operating under a name other than your own, register your business name with the Australian Securities and Investments Commission (ASIC).
  3. Obtain an Australian Business Number (ABN): Apply for an ABN through the Australian Business Register (ABR) for tax and business identification purposes.
  4. Register for Taxes: Depending on your business, you may need to register for Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, and other relevant taxes with the Australian Taxation Office (ATO).
  5. Set Up Business Records: Establish a system for managing your business records and finances, including bookkeeping and accounting practices.
  6. Comply with Legal Requirements: Ensure compliance with local, state, and federal regulations, including licensing, permits, and zoning laws.
  7. Arrange Insurance: Obtain necessary insurance coverage, such as public liability, workers’ compensation, and professional indemnity.
  8. Create a Business Plan: Develop a comprehensive business plan outlining your business goals, strategies, market research, and financial projections.
  9. Understand Employer Obligations: If you plan to hire employees, understand your obligations regarding wages, superannuation, and workplace safety.

What are the steps required to employ my first employee?

Employing your first employee in Australia involves several important steps to ensure compliance with legal and regulatory requirements. Here’s a comprehensive checklist:

  1. Understand Employer Obligations:
    • Familiarize yourself with the Fair Work Act 2009, National Employment Standards (NES), and any relevant Modern Awards or Enterprise Agreements that apply to your industry or workplace.
  2. Register for PAYG Withholding:
    • Register for Pay As You Go (PAYG) withholding with the Australian Taxation Office (ATO). This is necessary for withholding tax from your employees’ wages.
  3. Get Workers’ Compensation Insurance:
    • Obtain workers’ compensation insurance to cover any work-related injuries or illnesses. This is mandatory in every state and territory in Australia.
  4. Check Working Rights:
    • Verify that your employee has the legal right to work in Australia. You can use the Department of Home Affairs’ Visa Entitlement Verification Online (VEVO) service for this purpose.
  5. Prepare Employment Contracts:
    • Draft a written employment contract outlining the terms and conditions of employment, including job title, duties, salary, hours of work, and leave entitlements. Ensure the contract complies with the relevant employment laws.
  6. Set Up Superannuation:
    • Choose a default superannuation fund and set up superannuation contributions for your employee. You must contribute at least 11% (as of July 1, 2023) of their ordinary time earnings to their superannuation fund.
  7. Maintain Employee Records:
    • Keep detailed records of your employee’s personal details, employment history, hours worked, wages paid, leave taken, and superannuation contributions. These records must be kept for at least seven years.
  8. Provide Pay Slips:
    • Issue pay slips to your employee within one working day of paying their wages. Pay slips must include specific information such as gross and net pay, PAYG withholding amounts, and superannuation contributions.
  9. Set Up Payroll System:
    • Establish a payroll system to manage employee payments, tax withholdings, superannuation contributions, and other deductions. This can be done manually or using payroll software.
  10. Ensure a Safe Work Environment:
    • Comply with occupational health and safety (OHS) regulations to provide a safe working environment. Conduct risk assessments and implement safety policies and procedures.
  11. Understand Leave Entitlements:
    • Ensure your employee is aware of their leave entitlements under the NES, including annual leave, personal/carer’s leave, and parental leave.
  12. Report New Employees to the ATO:
    • Notify the ATO of your new employee by submitting a Tax File Number (TFN) declaration form. This can be done online or via paper form.
  13. Provide Fair Work Information Statement:
    • Give your new employee a copy of the Fair Work Information Statement, which outlines their rights and entitlements under the Fair Work Act.
  14. Consider Additional Obligations:
    • Depending on your business and industry, there may be additional obligations such as industry-specific licenses, training requirements, or adhering to child protection laws if employing minors.

 

By following these steps, you’ll ensure compliance with Australian employment laws and provide a solid foundation for your new employee’s role in your business. Consulting with an employment lawyer or HR professional can also help ensure you meet all legal requirements and best practices.

Do I Have to Register for GST?

You must register for GST if you: run a business or enterprise that has a GST turnover (gross income minus GST) that exceeds the GST threshold of $75,000.

What Tax Records Do i Need to Keep for My Business?

  1. Choose a Business Structure:
    • Decide on the type of business structure, such as a sole trader, partnership, company, or trust.
  2. Register a Business Name:
    • If operating under a name other than your own, register your business name with the Australian Securities and Investments Commission (ASIC).
  3. Obtain an Australian Business Number (ABN):
    • Apply for an ABN through the Australian Business Register (ABR) for tax and business identification purposes.
  4. Register for Taxes:
    • Depending on your business, you may need to register for Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, and other relevant taxes with the Australian Taxation Office (ATO).
  5. Set Up Business Records:
    • Establish a system for managing your business records and finances, including bookkeeping and accounting practices.
  6. Comply with Legal Requirements:
    • Ensure compliance with local, state, and federal regulations, including licensing, permits, and zoning laws.
  7. Arrange Insurance:
    • Obtain necessary insurance coverage, such as public liability, workers’ compensation, and professional indemnity.
  8. Create a Business Plan:
    •  Develop a comprehensive business plan outlining your business goals, strategies, market research, and financial projections.
  9. Understand Employer Obligations:
    • If you plan to hire employees, understand your obligations regarding wages, superannuation, and workplace safety.

 

Following these steps will help ensure a smooth start to your business in Australia.

What Is a Business Activity Statement?

A Business Activity Statement (BAS) in Australia is a form that businesses use to report and pay various tax obligations to the Australian Taxation Office (ATO). It is required for businesses registered for Goods and Services Tax (GST). Here are the key components and purposes of a BAS:

  1. Reporting GST: BAS is used to report the GST collected on sales and the GST paid on purchases. Businesses calculate the difference to determine their GST liability or refund.
  2. PAYG Withholding: If a business has employees, BAS is used to report the Pay As You Go (PAYG) withholding amounts, which are the taxes withheld from employee wages.
  3. PAYG Instalments: Businesses might also report and pay PAYG instalments, which are prepayments of income tax on business and investment income.
  4. Fringe Benefits Tax (FBT) Instalments: If applicable, BAS includes reporting and paying instalments towards the annual FBT liability.
  5. Wine Equalisation Tax (WET) and Luxury Car Tax (LCT): Applicable businesses report and pay these specific taxes through their BAS.

 

Businesses typically lodge their BAS monthly, quarterly, or annually, depending on their turnover and tax obligations. Accurate and timely BAS lodgment is crucial to avoid penalties and ensure compliance with tax laws.

What’s the Difference Between an ABN and an ACN?

The Australian Business Number (ABN) and Australian Company Number (ACN) are both important identifiers for businesses, but they serve different purposes:

  1. Australian Business Number (ABN):
    • Purpose: The ABN is a unique 11-digit identifier issued by the Australian Business Register (ABR) to all entities carrying on a business in Australia.
    • Usage: It is used for a variety of business-related activities, such as:
      • Registering for Goods and Services Tax (GST).
      • Interacting with the Australian Taxation Office (ATO) for tax and other regulatory purposes.
      • Issuing invoices to customers (with or without GST).
      • Facilitating dealings with other businesses and government agencies.
    • Applicability: Sole traders, partnerships, companies, trusts, and other entities engaged in business activities need an ABN.
  1. Australian Company Number (ACN):
    • Purpose: The ACN is a unique 9-digit identifier issued by the Australian Securities and Investments Commission (ASIC) to companies registered under the Corporations Act 2001.
    • Usage: It specifically identifies companies and is used for:
      • Company registration and administration with ASIC.
      • Identifying the company in legal and regulatory documents.
      • Appearing on company documents such as letterheads, invoices, and official correspondence.
    • Applicability: Only companies (including proprietary limited companies, public companies, and certain other types of corporate entities) need an ACN.

 

Key Differences:

  • Scope: ABNs are broader and apply to all business entities, while ACNs are specific to companies.
  • Issuing Body: ABNs are issued by the ABR, whereas ACNs are issued by ASIC.
  • Format: ABNs are 11 digits long, while ACNs are 9 digits long.

 

Combined Usage:

  • A company will have both an ABN and an ACN. The ABN incorporates the ACN but is prefixed and suffixed with additional digits to make up the 11-digit ABN.

 

In summary, while an ABN is necessary for all business entities for tax and business dealings, an ACN is specifically required for company identification and compliance with ASIC regulations.

Do I have to include GST on my Invoices?

If you are registered for GST: you need to write a tax invoice and include the GST for each applicable item. If you are not registered for GST: you can write a simple invoice (or ‘regular invoice’), which doesn’t need to include the GST for each item.

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