As your small business grows, you might be wondering when you should register for GST. You know that at a certain point you will have to, but is there any reason you should register before then? The short answer – it depends on you and your business. There are reasons to and not to register for GST before you have to, so let’s break them down.
I should also note that you should always speak with your accountant or financial advisor as the information I’m giving you is to help educate and to get you thinking about what you need to do for your business vs advise you of what’s right for your specific business.
When Should I Register For GST?
Broadly speaking, most people don’t register for GST until they absolutely have to due to earning over $75,000 annually. As soon as you register for GST you have to either charge clients 10% more or lose 10% of your current sales. Neither of these outcomes is particularly appealing. By not registering for GST you will be able to earn a little extra cash than your GST paying competitors thanks to keeping with the going rates and putting that extra 10% in your pocket rather than the ATO’s.
One thing you might regret from putting off registering, is that you won’t be able to claim anything back that is GST related. If you have registered for GST you will be able to claim business expenses, meaning that for every business purchase you make you can claim back the GST you paid. If you are looking to sell your company in the future it’s definitely a good idea to discuss early on in your business with an accountant about registering for GST because it gives your business an air of legitimacy and leaves the buyer one less thing to do. There are of course some businesses that are exempt from paying GST, so make sure you check that out here to avoid any extra costs to your business.
I hope you’ve found this article on whether to register for GST as a small business helpful and that it’s got your thinking about GST and your small business.
If you have more questions related to small business, make sure to join my active Facebook community, the Australian Business Collaborative.
Have an awesome day,
Angela
