Tax Tips for E-Commerce Businesses - What to Know
There's a good reason why more and more people are venturing into the e-commerce industry. In fact, many entrepreneurs have been thriving selling goods or services on digital platforms. However, despite how easy it may seem to set up, owning and running an online business isn't a walk in the park. There's a lot of things to consider, and on top of this is your business finance. When it comes to finances, one thing that shouldn't be neglected is your tax obligation. As much as possible, you have to stay on top of your taxes and remain compliant at all times.
That said, here are some valuable tax tips for your e-commerce business. Read more to see if you need to hire a business accountant to handle the taxes of your online business.
The need for ABN
The Australian Business Number (ABN) serves as a universal business name tag with a unique 11-digit identifier, which is a vital requirement for a business. This unique identifier allows the government to identify the legitimacy of your business. It also helps you interact with the Australian government, particularly when it comes to paying taxes. On a more specific note, the ABN represents your business entity for invoicing, ordering, and securing an Australian domain name.
When to pay for GST
The goods and services tax (GST) is essentially value-added tax for goods and services sold for domestic consumption. It is remitted to the government by the business for the goods or services paid for by the consumers. If you run an e-commerce business, it's not necessary for you to pay for the GST. You would only do so if and when your business has a turnover of more than $75,000 per year. This then requires you to add a ten percent tax on top of your existing prices.
Expense types for tax deductions
The good news is that businesses can actually claim tax deductions for a handful of expenses incurred for their business operations. If you're wondering what type of expenses you can request for a deduction, here are some of these:
Operating costs: These include expenses for your website creation and maintenance, such as domain and web hosting charges. You can also claim a deduction on your marketing and advertising costs, including tools utilized and services rendered.
Professional services: These expenses include services provided by your hired professionals such as a bookkeeper, accountant, or legal officer. You can also claim a deduction for the ongoing costs for needed tools, such as accounting software or application.
Shipping and packaging: The costs incurred in delivering your goods or services to customers can be claimed for a tax deduction. These include things such as shipping fees, packaging costs, and expenses for materials used.
Remember to have a system in place for the accurate recording of all your expenses. That way, you can legitimately file to tax deductions.
The tax is the government's lifeblood, and as such, every business should stay tax compliant. Even as an e-commerce business, you have the obligation to pay your taxes correctly as required by the law. It's a good thing, though, that you can claim for tax deductions to help your e-commerce business get by with your current finances. For streamlined tax management, it's best to hire a business accountant to handle the tax requirements of your online business.
We are an accounting firm in Gold Coast that helps businesses reduce taxes and augment profits. If you're looking for a business accountant on the Gold Coast for your tax planning and management, get in touch with us today!