GST: Understand What You Are Collecting

It is easy to look at your business bank balance after a strong month and think you have more money available to spend. We have helped business owners separate what the business has earned from the GST they have collected so they can better manage their cash and avoid surprises when BAS is due.

Understand what you are collecting

If your business is registered for GST, the GST you collect on taxable sales generally needs to be reported to the ATO. For example, if you charge a customer $1,100, that may include $100 of GST. That $100 is not simply extra business income available to spend.

Remember the GST you pay

GST can work in both directions. If you purchase eligible business goods or services, you may be able to claim a credit for the GST included in those purchases. This can reduce the net amount of GST you need to pay to the ATO.

Do not let GST create a cash flow problem

One common problem is spending all the cash that comes into the business without considering the GST portion. Then BAS time arrives and you need to find the cash to cover your GST obligation along with other amounts that may be due.

Set your GST aside

Regularly move the GST you collect into a separate savings account. This can make it easier to see what cash is actually available for your business and keep money ready for your BAS obligations.

Staying on top of GST throughout the quarter can make BAS time much easier. Keep your bookkeeping current, review what you are collecting and paying and know what you may need to set aside.

Need help keeping your GST and bookkeeping organised? We can help keep your books accurate and up to date so you have a clearer picture of your business finances.

Book a call to learn more about our services.