Apply Legal Requirements & Manage Small Business Finances Lesson 7 Cert IV - M. S. Martin March 2012

Todays Lesson Chapter 5 - Business Structure / Ownership – Relevant links – Taxation requirements Finance Spreadsheet, with wages component BAS Statements Cert IV - M. S. Martin January 2012

Business Ownership / Structure & Registration Chapter 5 Cert IV - M. S. Martin January 2012

Types of Ownership / Structure Common types of business structure used by small businesses are: Sole trader: an individual trading on their own Partnership: an association of people or entities carrying on a business together, but not as a company Company: a legal entity separate from its shareholders. These can be both private or public Cert IV - M. S. Martin January 2012

Links The first two links are not functioning correctly, so cross them out This is the 3 rd link on the first page and is a good guide Point/Business+Topics/Registration+and+licen ces/Register+your+business+or+company/Bus iness+structures+in+your+state+or+territory.h tm Point/Business+Topics/Registration+and+licen ces/Register+your+business+or+company/Bus iness+structures+in+your+state+or+territory.h tm Cert IV - M. S. Martin January 2012

NSW Office of Fair Trading gov.au/default.html Your second page in chapter 5, mentions BLIS. Remember the easiest way to access this is from the OFT site (we looked at it on 1 st week) Review this and next slides Cert IV - M. S. Martin January 2012

NSW BLIS - Business Licencing Information Service gov.au/?DCSext.ref=Home PageClick:Onlineservices Cert IV - M. S. Martin January 2012

Business Taxation – 3 rd page, Chpt. 5 As owner of a business it is your responsibility to work out what your tax requirements are There are also a range of tax deductions you may be entitled to In relation to running a business, including taxation and paying workers The link here will take you to the previous page – link for tax Cert IV - M. S. Martin January 2012

Briefly Tax and your business Depending on how you set up your business, will depend on how you and your employees pay tax. If you are a sole trader, it is like personal tax, with deductions If you are a partnership, each partner takes care of his or her tax obligation If you are a company, your tax depends on how you employ yourself (remember the company is a separate entity), but you will also pay company tax In any scenario, if you employ someone on wages: – the law requires that you must also withhold the proportion of tax an employee will pay on their wage for the government. PAYG – You will be required to contribute superannuation payments – Employers are required to make their contributions on at least a quarterly basis These are better conversations to have with your accountant and can also be set up after the business is trading. Note: If you just start trading, you will default as a sole trader initially. Cert IV - M. S. Martin January 2012

The Goods and Services Tax (GST) In Australia, this is a value added tax Meaning – Added on to the supply of goods and services It was a New Tax System (Goods and Services Tax) Act 1999, taking effect from July 1, 2000 The GST is levied at a flat rate of 10% on most goods and services, apart from GST exempt items – Exempt items are, food and beverages for human consumption, school and university fees, hospital treatment... To name a few. You must register for GST if you satisfy both of the following criteria: – You are carrying on an enterprise – You’re annual turnover will exceed $75,000 You can claim the GST back when you lodge your Business Activity Statement (BAS) – If your turnover is less than $2,000,000, you may elect to lodge your BAS either monthly, quarterly, or annually. Cert IV - M. S. Martin January 2012

Business Activity Statements (BAS) Businesses use an activity statement to report and pay a number of tax obligations, including: – GST – pay as you go (PAYG) instalments – PAYG withholding and fringe benefits tax You can lodge and pay electronically, by mail or in person An ATO overview guide to BAS statements link is below Cert IV - M. S. Martin January 2012

Completing your BAS Sample Spread sheet 3 with wages component as reference Cert IV - M. S. Martin January 2012

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Cert IV - M. S. Martin January

Cert IV - M. S. Martin January T2 is given to you by the ATO based on previous income, if its your first statement its an estimate (see your accountant) 1309 Only if there is a rate change, code is from the ATO

Cert IV - M. S. Martin January

Cert IV - M. S. Martin January

Cert IV - M. S. Martin January – 81 = 2348

References Competency reference text for ‘Apply Legal Requirements & Manage Small Business Finances’ Web sites as listed below: c=001/003/099&mfp=001&mnu=42557#001_003_099 c=001/003/099&mfp=001&mnu=42557#001_003_ =1,2,21,88&AID=542&PID=4 =1,2,21,88&AID=542&PID=4 Cert IV - M. S. Martin January 2012