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GST can be a thorn in your side but if you understand when it’s due, what to pay, and make the most of your accounting software, you’ll escape unscathed. Here are four of the most common mistakes we see business owners make with their GST.
- Not putting aside money to pay GST. For better cashflow, keep 15% of your taxable supplies in a separate account. If you’re registered for GST on a six-monthly basis, you’ll be expected to pay the GST collected minus the GST you paid for the same period.
- Registering for GST too early or too late. If you are starting your business and you register too late, you may miss out on claiming GST on initial start-up costs, and you also might face financial penalties from Inland Revenue if you later find out you met the requirements to register. Talk to us and we’ll work it out together.
- Confusion around leasing and hire purchase. If you’re buying assets or equipment (or there’s an option to take ownership) you can claim GST when the asset is acquired. But if you’re only leasing or hiring an asset, the GST is claimable on each payment. There are many different types of leasing deals out there, so be careful with the fine print as GST may only apply to part of the regular payment.
- Not claiming business purchases paid from personal accounts. When buying assets for business use, you can claim a GST deduction, when the asset is to be used 100% for business purposes. When you buy something using your personal account for the business, it might be missed from the business records, and GST forgotten and not claimed. Remember that where there is private use, such as with vehicles, you can’t claim all of the GST – you need to adjust for the expected private use component.