Bookkeeper & BAS Agent Sunshine Coast
You can almost hear actor Michael Caton most famous role Darryl Kerrigan in “The Castle” curse former Prime Minister John Howard whenever the discussion of the GST comes up.
The fact is the Australia Goods and service tax, while it’s not going to just go away, has been around for a long time and people are still getting it wrong when they are doing their books. This is bad business practice because on one end, you might be paying out too much and shortchanging your business, and on the other side you might not be paying enough and could cop a hefty tax bill.
Unless you a dedicated to finances, it is easy to make a mistake when it comes to GST. Here are some of the most common mistakes made when it comes to one of Prime Minister Howard’s legacy items.
Set up wrong!
You might have noticed when creating your Chart of Accounts in your bookkeeping software that there are plenty of options around which GST to factor in. Is it “GST on Capital”, “GST on Non-Capital”, “GST Free”, “Out of Scope”, or one of the many other options. The tax code that you set up for your accounts has to be correct from the start or you are going to be spending a lot of time and money fixing it up.
So, you received a business grant or a government subsidy, while this is great news for your business, it can cause havoc on your accounts if you are like most people and forget that most government schemes are inclusive of GST. Always double check the funding agreement to the final details before making your report on income.
Is it an asset?
Basic check of your GST knowledge; which code does a capital asset of over $1000 go under? If you said G11 then you are going to have a long night at the office as you are going to have to go back through all capital purchases and mark them as G10. One little number but it makes the world of difference to the tax office.
GST doesn’t have to be a nightmare, but it’s best to have an expert set your GST accounts up before the worst can happen. If you are looking for a hand in setting up, or just want some top notch expert GST advice, then contact our bookkeepers and BAS agents today!