Hi there, Victoria, author of Zest for Success, back with another why question. And my question today is, how much turnover do I need to have to register for GST?
So anyone who is in a business should have an ABN, an Australian Business Number, but until your turnover reaches $75,000 you are not required by law to register for GST. It does mean you need to put on your invoices that you’re not registered for GST or no GST is payable on that invoice. The question that goes from that is why wouldn’t I register for GST? So there’s a couple of reasons. The first is the compliance cost that if you register for GST, it means that you need to do BAS statements on either monthly, quarterly or annually basis. And that means either you need to do it, or you need to employ a bookkeeper or an accountant to do it. So that’s a cost to you.
Secondly, it gives you an advantage in some situations. If you’re quoting against someone, and they’re registered for GST, then their price is automatically 10% higher than yours. So that works if you’re quoting to the end user, the homeowner. So if I had to Carpet Care companies were going to come and clean my carpet and one was registered for GST and one wasn’t, then the one that isn’t has an advantage because he or she should be cheaper. So in working out whether you want to register for GST you need to decide these things. On the flip side, if you do register for GST, they don’t know how big or small you are, they assume that you have turned over over $75,000 and therefore you must be a legitimate business. The other thing is that if you are in an industry that doesn’t charge GST, for instance, education or medicine or fresh food, you may want to register for GST, before you hit that $75,000 threshold, because anything that you spend money on that has GST you get back as a cash refund.
So that’s my why for today. Any questions, please let me know but I’ll see you on the other side.