Not all businesses are required to register for GST. If you don’t have to, should you?
If your business turns over less than $75,000 per year, you may not be required to register for GST. Generally speaking, this means many small businesses are not obliged to register, although you should always check with the ATO (Australian Taxation Office) to be sure.
Even if you aren’t required to, though, you can choose to register anyway. But if you don’t have to, why would you?
Pros and Cons
As with many business and financial decisions, there are pros and cons to each option. To make the best decision for your business, you need to consider the implications.
Registering for GST
If you do register, there could be benefits for your business. Some people feel that GST registration adds credibility to a business.
Charging GST can also improve your cash flow, because you take in an extra 10% on every payment, which you only send to the ATO quarterly.
GST also cancels itself out. That is, the GST you charge your customers is balanced against the GST you have paid in business costs like fuel. Only the outstanding amount goes to the ATO, and in fact if you have paid more than you have received, you may be entitled to a refund.
Because of the paid-v-received balance, other businesses that have also registered for GST may be more willing to buy from you so that they can benefit from the equation. If your business’ primary customers are other businesses, this could be a significant factor.
On the other hand, not registering can also come with benefits. You won’t have to charge an extra 10% on your sales prices, so you can keep your prices lower to stay competitive or increase your profit margin without becoming expensive.
You also avoid all the paperwork that comes with tax collecting for the ATO.
To register, or not to register?
The choice is yours. You understand your business’ customers, needs, purpose and direction, so you are the best person to weigh up the decision. If you need help to grow your business further, contact us today.