Shane’s buying a shop, but while he’s “very excited” at the prospect, chartered accountant GAIL FREEMAN walks him through the practical facts of business life…
Elated, Shane came running into my office. “Gail,” he said, “my offer to purchase the shop has been accepted and I take over on April 1.
“I am very excited but I don’t know much about registrations and the other things I need to do. So I welcome any advice you can give me.”
I said: “Shane, this is great news. I’ll give you as much information as I can about that, then we will need another appointment to discuss the financial aspects of owning a business and the software requirements. “You need to consider your business structure. We already talked about the liability aspect and decided that operating as a sole trader was not suitable.
“You will have limited liability using a company and it is my understanding that you want to use a company rather than a trust structure.”
Shane replied that the company structure was best for him.
I told him I would register the company.
“The business name can be transferred to that company at settlement,” I said.
“The lawyers will prepare the settlement statement and advise you of the cheques you need to draw. I will help you with the necessary registrations and provide general advice on running the business as well as specific taxation advice and assistance with business activity statements (BAS) and income tax return lodgments.
“It is a requirement of my professional body that I send you a letter setting out the terms of our engagement.
“As the business turnover exceeds $75,000 annually you will need to register for GST. We can help you with this registration for the Australian Business Number (ABN).
“You will also be required to register for Pay as You Go Withholding (PAYGW) so that you can pay your staff’s wages. You pay GST, PAYGW and any income tax in the quarterly BAS that you are required to lodge.
“GST is payable by your customers on all sales, when you purchase goods most of them will contain GST and you receive an input tax credit.
“At the end of each quarter, your accounting system adds up all the GST you have collected through sales and you offset the credits on all the items that you have purchased. You show both of these figures in the BAS and pay the Australian Taxation Office (ATO) the difference between the two or receive a refund.
“When you pay your staff each week, you deduct tax. As your annual tax bill will exceed $25,000, you will pay your tax for your staff monthly. For the months of July, August, October, November, January, February, April and May you will have to lodge instalment activity statements (IAS) and for the months of September, December, March and June you pay the PAYGW in the BAS with the GST. You also have to lodge your payroll with the ATO through single-touch payroll (STP).”
Shane said there was a lot to take in, but what about superannuation?
I told him he would have to pay superannuation for his staff at 11.5 per cent of their gross wage.
“The legislated payment dates are September, December, March and June, but your fund may have different requirements, some funds require monthly payments. Effective from July 1, 2026 you will have to pay your superannuation at the same time as wages,” I said.
If you require any information on setting up a new business or anything tax or business related contact the expert team at Gail Freeman & Co Pty Ltd on 02 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au
Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser. Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.
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