Running a small business can be highly rewarding, but there’s often always a steep learning curve in the beginning. No matter the size of your company, however, there are some essential bits of knowledge all business owners should be familiar with and educate themselves in.
Test your knowledge today! How many of these tax terms are you familiar with? We have curated a quiz for you to test your tax knowledge.
1. What does TFN stand for?
a) Tax Free Number
b) Tax File Number
c) Tax Form Number
d) Tax Free Network
Answer: b) Tax File Number.
A TFN is a personal reference number for tax and superannuation purposes.
2. Who needs a TFN?
a) Anyone who is receiving income from an Australian source other than interest, dividends, or royalty payments
b) Anyone who has a spouse who is an Australian resident and is applying for Family Tax Benefit
c) Anyone who needs to lodge an Australian tax return or apply for an Australian Business Number
d) All of the above
Answer: d) All of the above.
Having a personal TFN is quite helpful because without one you could be paying far too much in tax. All businesses need a TFN. You use an individual TFN if you operate your business as a sole trader, and you need to apply for a separate business TFN if you operate your business through a partnership, company or trust.
3. Which of the following businesses must apply for and pay GST?
a) A business with a turnover of less than $50,000 per year
b) A business with a turnover of $75,000 or more per year
c) A non-profit with a turnover of $150,000 or more per year
d) b) and c)
Answer: d) – a business with a turnover of $75,000 or more per year, OR a non-profit with a turnover of $150,000 or more per year.
You must check each month if you have reached the threshold or are likely to reach it. If your turnover exceeds the relevant threshold you must register within 21 days to avoid penalties.
4. Which of the following may a business owner claim as an expense?
b) Business travel
c) Home office
e) Phone bill
g) All of the above
Answer: g) all of the above!
The above all have their own specific conditions: for example, business travel does not include “home to work” travel – that is, the daily journey you make in and out of the office.
Similarly, other claims may be capped at 50% (meals, for example).
5. What is the current GST rate in Australia?
Remember that the GST defines turnover as your business’ gross income, NOT your profit! Keep a close eye on your numbers (monthly checks), and if it looks likely you will reach or pass the Government’s threshold, you must apply for GST. You have 21 days to register once you reach this threshold.
An increase of the GST, to 15%, has been suggested but has not received support.
Further information is available from the Government’s Business website.
Are you a small business that needs bookkeeping support (especially around tax time?)
We get it – your business can’t afford to slow during tax time. But for the experts at Maximum Business Solutions, we work hard to help you get on top of tax obligation, particularly around this time of year. We live and breathe bookkeeping, so if you need support, you know who to call!
Maximum Business Solutions are bookkeepers in Melbourne, based in Black Rock and servicing small and medium-sized business owners across Bayside and the CBD. Call us now for support or organise a consultation.