There are a range of taxes that impact on small businesses so when starting a business it is important to work out which taxes and tax rules apply to your business and what you need to do to comply.
There are a number of tax registrations you may need to make, for example:
- Business Tax File Number (TFN). If you operate a partnership, company or trust, your business will need a TFN. You can register for a TFN when you apply for an ABN. Sole traders use their individual TFN and do not need a separate business TFN.
- Goods and Services Tax (GST). You need to register for GST if your business has a turnover of $75,000 or provides taxi services.
- Pay As You Go (PAYG) withholding. If you have employees or make payments to businesses that don’t quote their ABN you need to register for PAYG withholding.
- Fringe Benefits Tax (FBT). Fringe benefits are non-cash benefits you provide employees, for example salary sacrificing, car, loan or entertainment. If you provide fringe benefits to your employees you should register for FBT.
Record keeping & bookkeeping
It is a legal requirement to keep records that explain your business transactions. Records must be kept either electronically or on paper for at least five years.
Good business records also help you to manage your business, meet your tax requirements and make good business decisions.
Some records you need to keep for your business tax purposes include income, expenses, and bank records. If you have employees or contractors you will also need to keep tax file number declaration forms, records of wages and allowances, superannuation records, and contracts.
You can choose to keep your records manually or electronically. Manual systems include books or ledger accounts. Electronic options include software, web and spreadsheets.
Use the ATO Record Keeping Evaluation Tool to help you work out what records you need to keep for your business.
Before you can collect payment you may need to provide the customer with an invoice outlining the goods or services you provided.
An invoice is a record that allows your customers to pay you for goods or services you’ve provided them. It gives details of the purchase, including the type of product or service provided, the quantity and the agreed price.
Proper invoicing helps you to protect your business cash flow, maintain good records and meet your tax requirements.
Before you start invoicing customers it is a good idea to setup a system to record customer accounts, including information such as contact name, address, phone, email and ABN.
Find out more about invoicing.
If your business has employees or contractors you’ll need to understand your tax and superannuation requirements.
Staff & Tax
When you hire a new employee you must register them with the ATO and withhold payments for income tax purposes.
If you provide fringe benefits to your employees you will need to register and pay fringe benefits tax.
Staff & Super
Superannuation is money you set aside on behalf of your workers to provide for their retirement. You are required by law to make minimum super payments for all eligible workers. Use the Superannuation guarantee eligibility decision tool to work out if you need to make a super contribution for a worker.
The Small Business Superannuation Clearing House is a free online service that helps small businesses to meet their superannuation requirements. Employers can pay super to all employees in one single electronic payment to the Clearing House, which then distributes the payments to employee funds.
Small businesses with an annual turnover less than $2 million may be able to access a range of tax concessions:
- Income tax concessions
- Capital gains tax concessions
- Goods and services concessions
- Pay as you go instalment concessions
- Fringe benefit tax concession
- Research and development tax concession
The ATO offers a range of services and resources to help small businesses understand and comply with their tax requirements.
- ATO phone services
- Business helpline: 13 28 66 (8am-8pm Mon-Fri; 10am-4pm Sat local time)
- Superannuation: 13 10 20 (8am-6pm Mon-Fri)
- AUSkey enquiries: 1300 287 539 (8am-6pm Mon-Fri)