Over the next 7 blogs, I will outline the steps and the things you need to think about when opening a business.
2. Government Registrations
TFN
If you are registering as a sole trader, you will most likely already have a TFN.
If you are setting up as a company, the company will need to register with the ATO and obtain a TFN.
ABN
All businesses need an ABN. It identifies your business to the government and the community. This is the number that will go on your invoices to your customers.
GST
If your business is going to have sales of more than $75,000, you will need to register for GST.
If you think your sales will be around the $75,000 mark, you don't need to register until you hit the $75,000 mark in one financial year. If you never go over $75,000 then you don't need to register.
If you are required to be registered, you need to add 10% GST on your sales and charge this to your customers. This 10% will be collected by you and paid to the ATO on your BAS (see below under taxation obligations).
PAYGW
If you are a sole trader and you have employees or you are operating under a company, you will need to register for PAYGW. Basically, when you have employees you need to withhold tax from their wages and pay this to the ATO on their behalf.
If you are operating under a company and you are the only employee, you will still need to register for PAYGW as you will be an employee of the company.
Superannuation
If you are a sole trader and you have employees or you are operating under a company, you will need to register with a superannuation fund to act as your default superannuation fund for your employees. If an employee of yours doesn't have a superannuation fund, you are required to register them under your default superannuation fund and pay their superannuation contributions into this fund.
Who do you pay super to?
Employees - if your employee earns more then $450 in any calendar month, you have to pay superannuation guarantee on top of their wages
If the employee is under 18, they will need to work for more then 30 hours per week to qualify as well
Contractors - you must make super contributions for individuals if you pay them:
Under a contract that 50% or more of the payment is for their labour.
For their personal labour and skills - which may include physical labour, mental effort or artistic effort and not to achieve a result.
To perform the contract work personally - that is, they must not delegate.