Verve Magazine October – GST is not yours so don’t spend it

Verve Magazine October – GST is not yours so don’t spend it

The first in a six month series of Small Business Basics by Lisa Martin, Executive Director of professional bookkeeping and accounting firm, GoFi8ure.

GST is not yours – so don’t spend it

If you run a small business it’s likely you’ll be GST registered. While you don’t have to register for GST if you earn less than $60,000 many small businesses sign up anyway – often because having a GST number looks that bit more professional and who knows how quickly the company will take off and smash through the $60k barrier.

Of course, if you collect GST at 15%. You then have to pay back GST at 15%. GST comes in and then the same GST goes back out to the Inland Revenue. Simple eh?

Well, you would be amazed just how many people find themselves short when they come to do their GST returns and make their GST payments. You see, some people very foolishly think GST money is theirs to dip into. And they genuinely think they’ll pay it back before the GST deadline.

If that’s you, or you are tempted, listen up. Once you start spending or ‘borrowing’ the GST money I can guarantee you, you will not ‘pay it back’ before you have to file your return. The consequences of this will be disastrous. It’s far better not to touch it in the first place. Put it in another account and forget about it. Say out loud, ‘this is not mind to spend’.

One great way of keeping track of your GST is by signing up to Xero. Xero is linked to your bank transactions, so you can see how much GST you’ve collected at any point in time. Xero then helpfully prepares all the information you need so you can do your GST return and make your payment without faffing about for hours with receipts and an excel spreadsheet.