Saving for GST, PAYG and Super
Who has a personal savings account for holidays and unexpected bills? Why should you treat your business any different! Many NT small business’s find themselves in a panic at the end of every month or quarter trying to scrap together enough cash to cover the GST and PAYG liabilities when they fall due. With some commitment and discipline to following this best practice you will be able to chill out and pay you ATO bills when they fall due.
This is no big secret people! Every business should have an “online savings” type of bank account to stash cash to help cover GST and PAYG, ideally this bank account accrues interest and has limited free transaction each month, to make you think twice before pulling money out.
GST (It’s not yours to spend), transfer 10% of what you get paid into the online savings account, each time you get paid. This will accumulate quickly and go a loooong way towards covering your GST liability.
PAYG (the forgotten payroll expense), each time you process payroll, transfer the amount of PAYG to the online savings bank account. PAYG is one of those annoying liabilities which easily gets forgotten about by small business owners.
Superannuation (don’t spend others retirement funds), each payroll run, transfer the super amount to the online saver account. This will help ensure you always have enough to cover your liability when it is due.
If there’s anything left over in the account after all these things have been paid, then whoo hoo! You have some money to go towards your EOFY income tax bill.
Try to put the account “out of sight, out of mind” It can be all too easy to panic when cash gets low, the natural reaction is to quickly bring your savings back in to the trading account and tell yourself “I’ll pay it back when old mate pays his next big invoice” – Been there, done that, and their isn’t anyone hold you accountable so the money never gets paid back next minute your back in the same old boat…… sinking.