Five common mistakes startups make at tax time - Xero & Tax Accountants Brisbane. Northern Business Consultants

Five common mistakes startups make at tax time

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Starting a business is an exciting time, you are bringing your idea to life and showing it off to the world. Whilst this is exciting it is important to ensure that you consult professionals to ensure that you are structuring your business right and implementing the best practices from the beginning.

We have broken down some common problems that arise when people do not consult a professional for advice on starting their business.

  1. Choosing the wrong legal structure

The legal structure of your startup affects how much tax you pay and how you report it. Speaking with an accountant can help guide the setup of your business in the right direction and ensure that the legal entity is right from day one.

  1. Incorrect tax codes in your chart of accounts

Ensuring that you have the correct chart of accounts and tax codes will ensure that you document expenses and income appropriately. NBC are Xero Gold Partners and can ensure that your cloud accounting is set up correctly and offer training on how to best use the software for your business.

  1. Choosing cash or accrual accounting methods

When you register for GST (this may not have to be straight away, as businesses only have to register when they have a GST turnover of $75,000 or more) all businesses with a turnover of less than $2 million must select whether they wish to account for GST using the cash or accrual method.

You should consult your accountant as to what is the best method for your business. For example, if you have a cash-based business (i.e. a restaurant) and you have no debtors and pays creditors on terms then the accrual method may be the best choice for you, allowing you to claim the GST back on purchases immediately.

  1. Late payment of taxes and super

All businesses are required to pay taxes on a monthly or quarterly basis. Additionally, businesses that are registered for GST must submit a business activity statement (BAS) to complete the GST return.

The dates for quarterly reporting for BAS/GST for 2017 are as follows:

 

 

Quarterly reporting for BAS/GST
QuarterPeriodPayment due date
11 July – 30 September28 October
21 October – 31 December28 February
31 January – 31 March28 April
41 April – 30 June28 July

 

If you employ employees you may have to pay super (calculated from the day they start with you). These payments are quarterly and must be made by the following due dates:

Quarterly payment due dates for superannuation
QuarterPeriodPayment due date
11 July – 30 September28 October
21 October – 31 December28 February
31 January – 31 March28 April
41 April – 30 June28 July

 

 

  1. Mixing personal and business

Starting your own business often involves investing significant amounts of time and money. Often it can be difficult to determine what are business payments and what are personal, causing headaches come tax time. This can be made easier by having separate business and personal financial accounts from the start to ensure the records that are maintained are clean and easy to interpret.

 

If your startup requires assistance with structuring, cloud accounting software or business advisory NBC have qualified experts that can help you ensure that your business starts on the right foot for success, contact us on (07) 3862 8777 for an obligation free consultation.


Tanya Clonan
Tanya Clonan

Tanya manages the marketing and social media of NBC. She has Bachelor of Business, majoring in Marketing and Management degree at Queensland University of Technology.