It’s important to understand what registrations are necessary in order to pay tax for your business. That way, you will avoid any unexpected tax liabilities and when it comes to tax time there won’t be any confusion.
Keep reading to know exactly what you’ll need to file your taxes depending on your business structure.
Sole Trader
If you’re operating as a sole trader your individual Tax File Number (TFN) is used as your tax identification number.
Companies, Partnerships, and Trusts
You’ll need a separate business TFN number. You can apply for a business TFN at the Australian Business Register.
If you only need a TFN, then select “applying for other registrations tab” and click the link that says “Apply for a TFN for business”
Registering for GST
GST is the Goods and Services Tax. Once you register for an Australian Business Number, you’ll be able to register for GST if necessary and you can register for GST when you first register your business. GST is only registered for once, even if you have multiple businesses.
You must register for GST when:
- Your business gross income minus GST is $75,000 or more.
- You expect to reach this threshold in your first year of business.
- If you provide taxi or limousine service to passengers regardless of your income.
- If your business claims fuel tax credits.
To register:
- Have your ABN number.
- Visit the Business Portal or call 13 28 66.
- Use a registered tax agent or BAS agent.
- Complete an Add a new business account form (NAT 2954) which you can order online.
Pay As You Go Withholding and Installments
You must register for pay as you go (PAYG) withholding if you have employees or contractors in your business. You must register before you are required to withhold (whether or not you’re required to make a payment).
When you register for your ABN, business name, and GST you can also register for PAYG.
PAYG withholding is different from PAYG instalments. PAYG withholding requires employers to collect tax from the payments they make to their contractors and employees. PAYG instalments help businesses meet their tax liabilities.
PAYG instalments are regular payments you make throughout the year so you don’t have a big tax bill when you lodge your taxes.
Your payments are made based on your investment or business income. Everything you paid throughout the year will be offset against any tax you owe when you lodge your taxes.