Apply Legal Requirements & Manage Small Business Finances

1. Apply Legal Requirements & Manage Small Business Finances Lesson 7 Cert IV - M. S. Martin March 2012

2. Todays Lesson • Chapter 5 - Business Structure / Ownership • Relevant links • Taxation requirements • Finance Spreadsheet, with wages component • BAS Statements Cert IV - M. S. Martin January 2012

3. Business Ownership / Structure & Registration Chapter 5 Cert IV - M. S. Martin January 2012

4. Types of Ownership / Structure • Common types of business structure used by small businesses are: • Sole trader: an individual trading on their own • Partnership: an association of people or entities carrying on a business together, but not as a company • Company: a legal entity separate from its shareholders. These can be both private or public Cert IV - M. S. Martin January 2012

5. Links • The first two links are not functioning correctly, so cross them out • This is the 3rd link on the first page and is a good guide • http://www.business.gov.au/Business+Entry+Point/Business+Topics/Registration+and+licences/Register+your+business+or+company/Business+structures+in+your+state+or+territory.htm Cert IV - M. S. Martin January 2012

6. Cert IV - M. S. Martin January 2012

7. Cert IV - M. S. Martin January 2012

8. NSW Office of Fair Trading http://www.fairtrading.nsw.gov.au/default.html Your second page in chapter 5, mentions BLIS. Remember the easiest way to access this is from the OFT site (we looked at it on 1st week) Review this and next slides Cert IV - M. S. Martin January 2012

9. NSW BLIS - Business Licencing Information Service http://blis.fairtrading.nsw.gov.au/?DCSext.ref=HomePageClick:Onlineservices Cert IV - M. S. Martin January 2012

10. Business Taxation – 3rd page, Chpt. 5 • As owner of a business it is your responsibility to work out what your tax requirements are • There are also a range of tax deductions you may be entitled to • In relation to running a business, including taxation and paying workers • The link here will take you to the previous page – link for tax Cert IV - M. S. Martin January 2012

11. Briefly Tax and your business • Depending on how you set up your business, will depend on how you and your employees pay tax. • If you are a sole trader, it is like personal tax, with deductions • If you are a partnership, each partner takes care of his or her tax obligation • If you are a company, your tax depends on how you employ yourself (remember the company is a separate entity), but you will also pay company tax • In any scenario, if you employ someone on wages: • the law requires that you must also withhold the proportion of tax an employee will pay on their wage for the government. PAYG • You will be required to contribute superannuation payments • Employers are required to make their contributions on at least a quarterly basis • These are better conversations to have with your accountant and can also be set up after the business is trading. Note: If you just start trading, you will default as a sole trader initially. Cert IV - M. S. Martin January 2012

12. The Goods and Services Tax (GST) • In Australia, this is a value added tax • Meaning – Added on to the supply of goods and services • It was a New Tax System (Goods and Services Tax) Act 1999, taking effect from July 1, 2000 • The GST is levied at a flat rate of 10% on most goods and services, apart from GST exempt items • Exempt items are, food and beverages for human consumption, school and university fees, hospital treatment... To name a few. • You must register for GST if you satisfy both of the following criteria: • You are carrying on an enterprise • You’re annual turnover will exceed $75,000 • You can claim the GST back when you lodge your Business Activity Statement (BAS) • If your turnover is less than $2,000,000, you may elect to lodge your BAS either monthly, quarterly, or annually. Cert IV - M. S. Martin January 2012

13. Business Activity Statements (BAS) • Businesses use an activity statement to report and pay a number of tax obligations, including: • GST • pay as you go (PAYG) instalments • PAYG withholding and fringe benefits tax • You can lodge and pay electronically, by mail or in person • An ATO overview guide to BAS statements link is below • http://www.ato.gov.au/content/00182753.htm Cert IV - M. S. Martin January 2012

14. Completing your BAS Sample Spread sheet 3 with wages component as reference Cert IV - M. S. Martin January 2012

15. Cert IV - M. S. Martin January 2012

16. 12000 x 500 400 Cert IV - M. S. Martin January 2012

17. 409 29 29 Cert IV - M. S. Martin January 2012

18. T2 is given to you by the ATO based on previous income, if its your first statement its an estimate (see your accountant) 10909 12 1309 Only if there is a rate change, code is from the ATO Cert IV - M. S. Martin January 2012

19. 1090 29 1309 2428 Cert IV - M. S. Martin January 2012

20. 81 81 Cert IV - M. S. Martin January 2012

21. 1090 81 29 1309 2429 81 2429 – 81 = 2348 2348 Cert IV - M. S. Martin January 2012

22. References • Competency reference text for ‘Apply Legal Requirements & Manage Small Business Finances’ • Web sites as listed below: • http://www.fairtrading.nsw.gov.au/default.html • http://www.gstaustralia.com.au/ • http://www.ato.gov.au/businesses/pathway.aspx?sid=42&pc=001/003/099&mfp=001&mnu=42557#001_003_099 • http://www.austlii.com/ • www.standards.com.au • http://www.ebc.com.au/about/aboutserver.asp?inA=1&hx=1,2,21,88&AID=542&PID=4 Cert IV - M. S. Martin January 2012