First of all, you must be register for GST if:
- Your business turns over, or is expected to turn over $60,000 or more a year (turnover is your total income before expenses and GST).
- Your prices include GST.
Basically, you don’t have to be GST registered if your annual turnover is less than $60,000 but there are some advantages by becoming GST registered on a voluntary basis.
The Advantages of being GST registered:
- You can claim back the GST from the goods and services you bought from someone who is GST registered, which is great when you are starting up and have to buy a lot of stuff.
- You can claim back GST from second hand goods that are bought from someone who is not GST registered.
- Your business look more reliable. If your business is not registered for GST, your potential clients will know you don’t have much work.
The Disadvantages of being GST registered:
- You need to pay 15% of what you receive from selling your goods or services to IRD.
- Because you need to pay 15% of your sales, your price will likely be increased at least 15%. If you deal with non-GST registered customers, they won’t be happy with a price increase.
- You need to complete regular GST returns, which will increase your accounting fee.
- You need to pay GST back on any assets you keep when you deregister or cancel GST registration.
Still not clear? Please contact customer support team (info@consolgroup.co.nz) or your assigned accountant for further details and/or clarification.
