Company obligations and responsibilities - All you need to know about it and how to be on top of everything
- Nov 08, 2022
- 20 min read
Overview
- What are the obligations of a company?
- Sole traders / ABN Holders / Partnerships
- Company obligations and business structure
- How your Sleek accountant can help with your ASIC company responsibilities
- TAX and other company obligations
- How your Sleek accountant can help with your company’s responsibilities for tax?
- How your Sleek accountant can help with your payroll company responsibilities
- Annual company tax
- Fringe benefits tax
- Keeping records
- All you need to do
This is so exciting, you have started your new business and are off to a great start.
Well done!
But you know as a business owner, lurking in the background are obligations of a business and compliance tasks you need to keep up with.
It’s not just taxes you need to keep up with. There are ASIC requirements (remember, they’re the regulator of all businesses in Australia), and other paperwork if you are employing staff.
Let’s get stuck into your company obligations, so you have a good idea of what your responsibilities are.
It might get a little overwhelming, but don’t freak out! The team at Sleek helps business entrepreneurs like you who may need a little extra support.
In each section, we’ll describe your business obligation, and then we’ll show you how our accounting team or corporate secretarial team can help you. You’ll then know exactly how much help you will need. Easy!
An accountant will set you up for success so that your obligations and commitments become routine. for my business
What are the obligations of a company?
Your business structure will most likely determine your company obligations.
So, let’s swing into action and start with sole traders and partnerships.
If you’re a company, skip this bit and scroll to the next section titled ‘The obligations of a company business structure.
Sole traders / ABN Holders /Partnerships
The business structure of a sole trader or partnership is the simplest of the structures, however, you will still have some obligations to fulfil.
As a sole trader or partnership, you will need to record all your business expenses and income on your personal tax return together with other income sourced from employment or investments.
Sleek Scoop:
If you are not registered for GST, you will be required to remit your PAYG withholding tax on a monthly basis through your Instalment Activity Statement (IAS).
GST Registered Sole Trader / Partnership
Does your business have a turnover that is over $75,000 annually and/or provides taxi-travel or rideshare services?
Then you will need to register for GST.
Once you are registered with the ATO, you will need to report and pay your GST obligations on a quarterly basis in your Business Activity Statement (BAS) return.
Not registered for GST? You will be required to remit your PAYG withholding tax on a monthly basis through your Instalment Activity Statement (IAS).
How your Sleek accountant can help with your business obligations:
- Cruisy setup. Your Sleek accountant will set you up so you can easily and quickly record your expenses and income, so this process doesn’t become burdensome (and to make sure you claim everything your business is entitled to claim!).
- Peace of mind. We will ensure your records are up to date, to easily calculate and report your PAYG withholding and GST so you know exactly how much to pay the ATO and when it is due.
- Due date reminders. For example, if you are using a business trading name that is not your own name, you will need to renew your business registration with ASIC (renewal can be every year or every three years).
- Extra time to pay. Using a Sleek accountant will also give you an extra 4 weeks to pay your GST and PAYG! Now, who wouldn’t like extra time to pay their taxes?
Company obligations and business structure
ASIC Company Obligations - Annual Review
Your annual review with ASIC is usually on the same date your company was registered. You will receive your annual statement and an invoice to renew your registration.
- Lodge annual return – You will need to check your annual review has all the correct details about your company (shareholders, business addresses, owners’ names and addresses) and you will need to make any updates if necessary.
- Pay annual fee – Pay your ASIC invoice by the due date.
- Keep a register – Your company should always maintain a register of all the company’s members, copies of minutes from any general meetings, directors’ meetings, and any relevant financial records.
- Pass a solvency resolution – This annual resolution simply states that you, as the director, have reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
- Board Meeting Requirements – There is usually one board meeting per year, (it does not need to be a formal meeting). The decisions of directors can be affected by a written resolution.
How your Sleek accountant can help with your ASIC company responsibilities
- Lodge and check your ASIC annual review has the correct details listed.
- File any ASIC review changes.
- Prepare your solvency resolution for your director/s.
- Write up board meeting minutes.
All you need to do:
- You will need to pay the ASIC invoice (and we’ll tell you when to pay in advance, with no last-minute surprises).
- Sign and file your solvency resolution and board meeting minutes.
TAX and other company obligations
Are you registered for GST?
All companies must register for GST if their turnover is or is expected to be over $75,000 a year ($150,000 or more for non-profit organisations).
There are also other criteria that may apply – your business provides taxi or limousine travel or your business wants to claim fuel tax credits. More details can be found here.
Lodge monthly/quarterly BAS statement:
The BAS statement reports your taxes due for the month or quarter, depending on your frequency as determined by the ATO.
Here you will report the amount of GST your company collected – this is the GST component of your sales.
Then, subtract the amount of GST your company paid on your purchases and expenses – such as the GST on your mobile phone bill, the rent you paid, and GST on equipment purchases.
This will give you the total GST to be paid.
If you use an accounting software package like Xero, you can simply run a GST report and double check you have entered the correct GST for each transaction.
How your Sleek accountant can help with your company responsibilities for tax?
Your Sleek accountant can:
- Set you up on Xero so your transactions (purchases and income) are automatically recorded.
- Collate, check and report your BAS statement to the ATO.
- Notify you how much to pay and when it is due.
- Using a Sleek accountant will also give you an extra 4 weeks to pay your GST!
All you need to do
- In a nutshell – pay your GST on the due date!
If you (will) have employees
- PAYG
As a business owner, if you hire employees, you will need to help them pay their PAYG (Pay As You Go). PAYG is the employees’ tax taken from their earnings.
Your business will need to register for PAYG with the ATO before you hire any new employees.
The PAYG you will need to pay is automatically calculated through your payroll system in your accounting software.
You will then need to record wages and salaries for the period and pay your PAYG obligations through your BAS statement (along with your GST and company tax) either monthly or quarterly.
- Superannuation
Superannuation is money an employer sets aside from an employee’s wages or salary to help them save for their retirement.
It is calculated as a percentage of their wages/salary and paid into the employees’ approved superannuation fund.
As of 1 July 2022, superannuation is 10.5% and can be paid monthly or quarterly.
- Workers Compensation
Workers’ compensation is a type of insurance to protect your employees.
Employees’ wages are covered under workers’ compensation if they are injured or become sick due to their work. Your business must pay for it in each state and territory where you hire employees.
How much workers’ compensation you pay is calculated on your annual wages, salaries and superannuation paid to your employees. It is also weighted by industry (this determines the risk).
It can be paid monthly or yearly.
- Payroll tax
You may be liable for payroll tax if your Australian total wages exceed the tax-free threshold in each state or territory. This state tax varies between states and territories, using thresholds and numbers of employees.
You will need to check each state or territory you are employing staff in. For example, in NSW, the total payroll threshold is $1.2 million and the tax rate is 5.45 per cent (accurate as of 1 July 2022).
Payroll tax is lodged monthly into each relevant state or territory State Revenue departments.
How your Sleek accountant can help with your payroll company responsibilities
Your Sleek accountant can:
- Get you set up with a payroll system and process, so it is easy to pay, record and report your employees’ obligations.
- Manage your payroll process every pay run and organise employees’ salaries to be paid.
- Lodge your BAS statement which includes your PAYG component with the ATO on a monthly or quarterly basis.
- Automate your superannuation calculations and amounts to pay to each employee’s superannuation account quarterly.
- Calculate your total wages and lodge with your workers’ compensation insurer.
- Calculate if payroll tax is applicable in each state or territory. If so, report and lodge your monthly payroll tax.
Again, using a Sleek accountant means you get an extra 4 weeks to pay your PAYG!
All you need to do:
- Your Sleek accountant will advise the total amount of PAYG to pay by the due date!
- Pay the lump sum of superannuation into a super holding account and this will be automatically distributed to each employee’s super account – no need to make multiple payments to every super account!
- Know you’re covered by paying your yearly or monthly instalments to your workers’ compensation insurer.
- Pay the total payroll tax in each state or territory as reported by your accountant.
Annual Company tax
Company tax is a tax on the profit your company makes.
The company tax rate from 2022 is 25% for businesses with an annual turnover of less than $50 million.
The company tax is paid through the BAS statement and calculated as a percentage of your last years’ annual return submitted.
How your Sleek accountant can help
- Ensure you are paying the correct company tax by checking the ATO’s calculations match with your business annual return.
- Collate your final company tax return and lodge it with the ATO
All you need to do
Sign your annual company tax return and
Pay the company tax when it is due (this too will be included in the BAS statement).
Fringe benefits tax
A Fringe Benefits Tax (FBT for short) is a tax on benefits that are paid to an employee, outside of their wage or salary.
Basically, the tax is paid on benefits such as providing parking to an employee, paying an employee’s health insurance or school fees outside of their wages, discounted loans, or leasing a car or laptop on behalf of an employee.
The FBT year is 1 April through to 31 March of the following year. It is a complex tax to calculate and tricky to record in payroll and accounting systems.
How your Sleek accountant can help with your FBT company responsibilities
- Advise if, as part of your company obligations, your business needs to report and pay fringe benefits tax.
- Calculate and report your fringe benefits tax to the ATO.
All you need to do
Pay the total fringe benefits tax as instructed by your Sleek accountant.
Keeping records
You know all those receipts in the shoebox and glovebox or the invoices shoved into the desk drawer?
It is law that you keep these for five years from the date you lodge your tax return.
What do you need to keep? Payments you have received, expense receipts, paperwork when purchasing assets, all employee and contractor records and any gifts and donations that may be tax deductible.
How your Sleek accountant can help
- Create an easy-to-manage system that quickly captures the paperwork using Xero as a filing system.
All you need to do
- Follow the system and it’s all done for you.
You got this? Don’t worry if you don’t understand the obligations of a business. That’s what we’re here for.
Sleek accountants are with you, every step of the way. Our personal accounting monthly plans cover everything you need to make this side of your business easy as!
Click here to see what monthly accounting plans will suit your needs. They start from just $5 per business day (that’s the cost of one coffee for a whole lot of peace of mind)
