Part 1 focused on tax words for Individual Taxpayers, here’s the latest on what to look out for those in business!
Some additions have been made to Part 1!
- Australian Business Number (ABN) – similar to a tax file number, an Australian Business Number helps identify your business to the government
- Sole Trader – the simplest way of forming a business for an individual. The business runs in your personal name leaving you legally responsible for all obligations in the business. This also can create major risk issues with your personal assets and liabilities.
- PAYG Instalments – When you lodge your first sole trader tax return that results in a tax payable, the ATO will issue out PAYG instalments. This is designed to help the ATO ensure you can meet your tax obligations during the year by paying an estimated amount in advance quarterly instead of paying a one lump sum at the end of the financial year. If you have paid too much in advance a refund can be issued once the tax return is finalised however, if you have not paid enough during the year the difference will be payable. Note: the amounts payable per quarter can be varied, please speak to your trusted tax agent)
- Goods and Services Tax (GST) – A 10% levy added onto Goods and Services which in most cases is payable by the end consumer. The seller registered for GST will need to remit this back to the ATO via a Business Activity Statement.
- Business Activity Statement (BAS) – Report lodged to the ATO showing the amount of GST received through sales and paid through purchases. The net amount will result in either a GST refund or payable.
- Partnerships – an association of people running a business together but not as a company. This is very similar to that of a Sole Trader as it can leave you liable for personal assets and liabilities.
- Company – Companies can be public or private with the general difference that public companies are listed on the stock exchange and private is not. They are a separate legal entity which can help provide asset protection and help maximise your tax position. Please speak to your trusted tax agent for more information.
- Trusts – an entity that holds property (assets) and income for the benefit of others. There are many different types of trusts the most common being Unit (fixed) trust and Family Trusts. Trusts can be prepared in very flexible but complex ways which depends heavily on your individual circumstances. These should be set up with the guidance of your trusted tax agent.