Starting a new business comes with plenty of responsibilities, and one of the most common areas of confusion is GST. Understanding how the Goods and Services Tax (GST) works can help you stay compliant, avoid costly mistakes and manage your cash flow more effectively.

If you’re new to business, here’s a simple guide to GST and what it means for you.

What Is GST?

GST (Goods and Services Tax) is a 10% tax added to most goods and services sold in Australia.

If your business is registered for GST, you’ll generally:

• Collect GST on behalf of the Australian Government when you sell goods or services.
• Pay GST on many business purchases.
• Report and reconcile GST through your Business Activity Statement (BAS).

The GST you collect doesn’t belong to your business. You’re effectively collecting it on behalf of the Australian Taxation Office (ATO).

Do I Need to Register for GST?

You must register for GST if your business has a GST turnover of $75,000 or more per year. You may also choose to register voluntarily if your turnover is below this threshold.

Some businesses register early because they want to:

• Claim GST credits on business purchases.
• Appear more established when dealing with customers and suppliers.
• Prepare for expected business growth.

How Does GST Work?

Let’s look at a simple example.

You invoice a client:

• Service Fee: $1,000
• GST: $100
• Total Invoice: $1,100

You collect $1,100 from your client, but $100 of that amount is GST that will need to be remitted to the ATO.

Now let’s say during the same period you purchase business supplies:

• Purchase Cost: $550
• GST Included: $50

Because you’ve paid $50 in GST on business expenses, you may be able to claim this amount as a GST credit.

In this example:

• GST collected: $100
• GST paid: $50
• GST payable to ATO: $50

What Is a BAS?

Once registered for GST, you’ll generally need to lodge a Business Activity Statement (BAS) either monthly, quarterly or annually, depending on your circumstances.

Your BAS reports:

• GST collected from sales
• GST paid on purchases
• Pay As You Go (PAYG) withholding (if applicable)
• Other tax obligations

The BAS helps determine whether you owe money to the ATO or are entitled to a refund.

What Can You Claim GST On?

You may be able to claim GST credits on eligible business expenses, including:

• Office supplies
• Business equipment
• Software subscriptions
• Fuel and vehicle expenses used for business
• Professional services
• Marketing and advertising

To claim GST, you generally need a valid tax invoice and accurate records.

Common GST Mistakes

Many new business owners make simple mistakes that can lead to BAS errors and unnecessary stress.

Some common mistakes include:

Claiming GST Without a Tax Invoice
Always keep records of business purchases and ensure you have appropriate documentation.

Mixing Personal and Business Expenses
Using the same account for personal and business spending can make GST reporting difficult.

Incorrect GST Coding
Not every transaction includes GST. Entering transactions incorrectly can affect your BAS.

Forgetting to Set Aside GST
A common mistake is treating GST as business income and spending it. Remember, some of the money you’ve collected will need to be paid to the ATO.

Tips for Managing GST Successfully

Keep Accurate Records
Maintain organised records of income and expenses throughout the year.

Use Accounting Software
Cloud accounting platforms can help automate GST tracking, invoicing and reporting.

Reconcile Your Accounts Regularly
Regular reconciliations help identify issues before BAS lodgement.

Don’t Leave BAS Until the Last Minute
Keeping your bookkeeping up to date reduces stress and improves accuracy.

Seek Professional Advice
Getting the right advice early can save time, money and avoid costly mistakes.

Final Thoughts

GST can seem complicated when you’re first starting a business, but once you understand the basics, it becomes much easier to manage.

The key is maintaining good records, understanding your obligations and ensuring you set aside GST collected from customers. With the right systems in place, GST doesn’t have to be a burden on your business.

Need Help With GST or BAS?

At Tri Accounting, we help new and established business owners understand their GST obligations, stay compliant and lodge accurate BAS statements. Whether you’re registering for GST for the first time or want confidence that your bookkeeping is on track, we’re here to help.

Book a free consultation today and let us help simplify GST for your business.