GST in Accounting

Hi there. I'm Liz Jarvis, and this is Better Business Insights. In today's episode, we're going to talk about the GST. Now there's so much confusion for new Business Owners, in particular, about the GST. What is it? Why do we have it? Do I need to register? All those are questions that get quite confused.
When I'm in the various business groups that I'm in and I see questions around the GST put out there, I'm quietly terrified about some of the answers that come from other Business Owners. Now, the reason for that, is that each Business Owner’s situation is unique, and for various reasons they might register or not register. They might set their prices at a level that includes GST or at a level to get a foot into the market without GST. When they register, they might add GST or they might have to cop it without putting up their price.
The GST is - it stands for Goods and Services Tax. It's our Government's way of taxing the end user. So, it's about capturing some tax every time you spend money. It's partly designed to get rid of the black market of the people that are doing everything for cash and never paying anything in tax.
So, we need to remember that it's a tax that helps our Government pay for things for us. We, the Business Owner, if we're registered for GST, we're a tax collector. So, we're required, unless you're in one of the carve out areas, like medicine or something, we're required to add some GST onto the top of what we're selling our customer, on to the top of the price and collect it on behalf of the Government.
On the other side of things, we're not the end user of the things that we're paying for in our business. So, we're allowed to claim the GST. So, when we buy a computer, it's got GST on it and we can claim that GST. And the two things together, the GST we've charged and the GST we've claimed they come together through our BAS statement, our Business Activity Statement.
If we have collected more than what we have been able to claim, then we need to pay GST on our BAS. And that's actually a good thing. It's a sign that you're probably making a profit.
For some businesses, they have some big setup costs before they get going, and they might want to register for GST, early. For other small businesses, they may not want to register for GST until they hit that $75,000 threshold. But this is a question for tax professionals. They will take into account the context of your business. The goals and plans you have for your business, the timing of various things, the nature of what you are selling, whether it's services or goods.
So, it's very important that you seek advice from the right place about anything related to GST.
I hope that helps in your understanding. Obviously, it's just a little tiny slice of what the GST is all about, but I hope it helps you. Thanks for watching Better Business Insights and I hope I can be of service to your business one day.
Reach out to us through all our social media and through our website. Or give us a call in the office. Have a fantastic day.

GST is a confusing subject for many business owners. Every business is unique so the rules must be applied carefully. As a business owner you only need to understand the way it applies to your business. Don't be distracted by how it works in someone else's business ! To help you I have outlined how it works and why there is so much variation. Reach for a free strategy session and I can look over it with you.

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