Tax advice for starting a business in Australia
If you are starting a business in Australia, you should contact King Lawyers before you start and get legal advice on the relevant tax issues for your business. It is important that you understand the tax obligations of your business and comply with them. If you fail to do so, you may have to pay heavy fines and penalties to the Australian Taxation Office (ATO).
Important issues to consider when starting a business in Australia
Starting a business in Australia is exciting, but it can also be very costly and stressful if you do not get the right advice at the start to help you plan and understand your tax obligations under the law.
Before you start a new business, you need to understand:
- The tax obligations of your business under the law
- The superannuation obligations of your business under the law
- The employment obligations of your business under the law
- Your business structure and its tax implications
- Whether you are in fact carrying on a business or a hobby
- Your business registration requirements with the ATO
- Your business licensing requirements under the law
- The accounting requirements for your business
- Your record keeping obligations under the law
- How you should correctly report your income to the ATO
- Whether you need to be registered for GST
- Whether you need to be registered for any other federal taxes
- Whether you need to be registered for any state taxes
- What deductions you can claim for your expenses
- What tax documents you need to lodge with the ATO
- The deadlines for lodging tax documents with the ATO
Record keeping for small businesses in Australia
For tax purposes, good record keeping is important and necessary under the Australian tax laws. It will also make your life a lot easier if you are audited by the ATO.
Keeping good tax records will help you:
- provide written evidence of your income and expenses to the ATO
- help you or your tax agent prepare your income tax return with the ATO
- ensure that you are able to correctly claim all your entitlements under the tax laws
- reduce the risk of tax audits and adjustments by the ATO
- resolve issues relating to disputed assessments or adjustments with the ATO
- avoid exposure to fines and penalties by the ATO
Therefore, keeping good records is necessary and helpful if you are starting a business in Australia.
The tax laws in Australia require business owners to keep relevant business records and documents for a minimum period of five years from the date of lodgement of tax documents with the ATO. Business records include:
- tax invoices
- payment receipts
- accounting records
- bank statements
- credit card statements
- employee records (e.g. tax declarations and employment contracts)
- motor vehicle records
- lists of debtors and creditors
- list of asset and liabilities
If you obtain receipts or invoices for your business, you should ensure that they should show the following details:
- name of the supplier
- supplier’s Australian business number (ABN)
- amount of the expense or purchase
- nature of the goods or services purchased or expense incurred
- date the expense was incurred
- date of the document
Business records must be in writing. This can be in paper form or electronically.
Records must be kept in English and be easily retrievable.
Legal advice from leading tax lawyers in Australia
The content of this article is offered as general information only and should not be relied on as specific legal advice.
To get legal advice from King Lawyers on your specific circumstances, please contact us to arrange an initial consultation.