GST for company yet to make more than 75k a year

[woohoo]

Hi

i just started a consultancy service company.

Currently I havent registered for GST.

Lets say if i eventually make more than 75k a year, does it mean I have to register for GST then, and then start charging gst for my service?

Before I reach the 75k threshold, i think it is better not to hassle with gst cos it just means more accounting and bookeeping work for me every 3 months?

 

[Aaron_C]

Yes you will be required to register for GST

 

[pennyk]

But you might want to think about the "message" that you are giving people by not being registered for GST.
If its a serious business and you want to be successful, do you want to be advertising the fact that your turnover is under $75K?
It also depends a bit on who your customers are. If its the general public, it doesnt matter.
But if you are selling to other businesses, it can be quite frustrating for them if you are not registered. they have to set it up differently in their accounts to be "no GST".... you really want to make their life as easy as possible, and in my experience, that would involve being registered for GST..

 

[RedCat]

Since youre just starting out you'll probably run at a loss to begin with, so don't forget that if you're registered for GST you'll get refunds every quarter if your GST expenses outweigh the income

 

[Marty McDonald]

I agree with Penny and Redcat here. Also you might as well get your systems in place upfront. It only takes me about an hour every quater to lodge / work out mine. Luckily my affairs are quite simple as I assume yours would be initially.

 

[woohoo]

noted guys,
i will apply for gst tomorrow.
thanks!

 

[buster]

Hi

i just started a consultancy service company.

Currently I havent registered for GST.

Lets say if i eventually make more than 75k a year, does it mean I have to register for GST then, and then start charging gst for my service?

Before I reach the 75k threshold, i think it is better not to hassle with gst cos it just means more accounting and bookeeping work for me every 3 months?

If it is too much hassle just get your accountant to do it, especially if you have one to do your income tax any-way Mine only charges $250 a quarter, best money you can spend as I hate book work.

 

[lizzie]

I use MYOB and it spits my out in 30secs every quarter ... although I do spend half a day inputing the filing tray of invoices etc ...

 

[Aaron_C]

I use MYOB and it spits my out in 30secs every quarter ... although I do spend half a day inputing the filing tray of invoices etc ...

Isn't it great fun working out your next tax bill lizzie...

 

[Ergophobia]

If it is too much hassle just get your accountant to do it, especially if you have one to do your income tax any-way Mine only charges $250 a quarter, best money you can spend as I hate book work.

a bookkeeper will do it for about $60/quarter, I only pay the accountant to do the EOFY stuff

Best to set up properly and charge GST now, some clients might not like you hitting them up for an extra 10% down the track.

If you are planning on growing your consultancy, you should also consider including payroll tax in your rate buildup.

 

[wylie]

Would depend on your future plans too. I know someone who has kept his income deliberately under $75K to avoid having the hassle of all that is involved with GST.

His is not a business that hinges in any way on what others think about him though.

 

[buster]

a bookkeeper will do it for about $60/quarter, I only use the accountant to do the EOFY stuff

Best to set up properly and charge GST now, some clients might not like you hitting them up for an extra 10% down the track.

If you are planning on growing your consultancy, you should also consider including payroll tax in your rate buildup.

If thats all you use your accountant for you either have a dud accountant, or are not utilizing a valuable source of acquired knowledge, the rules are constantly changing and the best professionals are continously updating their knowledge but not even those can keep up and know it all.

 

[Ergophobia]

If thats all you use your accountant for you either have a dud accountant, or are not utilizing a valuable source of acquired knowledge, the rules are constantly changing and the best professionals are continously updating their knowledge but not even those can keep up and know it all.

I updated my post for you... My accountant doesnt charge in 15 minute increments for advice. I pay him a healthy sum at the end of each financial year for "preparation of tax returns" but its more of a subscription fee / "christmas in july bonus"

 

[Ergophobia]

Would depend on your future plans too. I know someone who has kept his income deliberately under $75K to avoid having the hassle of all that is involved with GST.

His is not a business that hinges in any way on what others think about him though.

if the business turnover is less than 75k id really question the benefit of running it through a company rather than just setting up as a sole trader. IMO consultants usually go PTY LTD to cap the income tax at 30%

 

[Aaron_C]

if the business turnover is less than 75k id really question the benefit of running it through a company rather than just setting up as a sole trader. IMO consultants usually go PTY LTD to cap the income tax at 30%

Some people have a real grudge against the taxman that they will do that. But they fail to realise that for a consulting business most of your clients will be businesses who can claim back the GST credits anyway....so it makes no difference. Plus it limits what you can do when you're borrowing money because without GST registration no one will accept a self-certification above 75k a year..

 

[damacc]

I find two things with GST registration.
1) from a business perspective it gives the impression that you are running a professional business (some people know what the threshold is or even know there is a threshold); and
2) if you want to finance loans then being GST registered may assist you here as well.

 

[Sunfish]

But if you are selling to other businesses, it can be quite frustrating for them if you are not registered. they have to set it up differently in their accounts to be "no GST".... you really want to make their life as easy as possible, and in my experience, that would involve being registered for GST..

I suggest a lot of businesses just wouldn't do business with you. I would also suggest you check the legislation. Profit/loss has nothing to do with it, it is gross sales of $80G or something like.

If you're registered you can get a refund of the GST on your new vehicle if that is more than the amount collected on your sales for that period.

Just do it!

 

[Ergophobia]

If you set yourself up correctly, you can also park that gst some place until it's time to hand it back, like an offset account.

I did some sums where by doing this I shaved 10 years off my ppor mortgage

Best to talk to your accountant