Someone asked an accountant type of marketing question in a Facebook Group recently. It’s about how to raise your prices when you start charging GST. It was a Hair Salon business asking the question. For a startup its a curious situation, ever thought about it?
Being heavily involved in small business issues, my advice is to add the GST when you first start out, whether you charge it or not. Salons are a B to C (Business to Customer) type of Business Model which means the end user pays, there is no passing it on further down the line as with other Models. That being said your clients don’t realise or think about the difference being tax so it’s harder to do, down the line, generally. IF you haven’t started your salon yet I highly recommend including the GST price (the equivalent amount) in your prices SO when you do charge it your clients won’t notice. You won’t need to raise your prices.
The amount you need to earn to start charging it is only $75,000 so chances are it will happen pretty quickly anyway. It will mean you’ll have more cash from sales in the beginning and then take a hit cash wise as it the extra becomes GST that you’ll pay as GST credits, to the ATO (you’ll always pay more GST than you claim unless you are investing in Capital Items) but you won’t have the problem of raising your prices when you have to, when you have to start charging GST. I’ve seen this work well for several different enterprises in the retail space such as non medicare related health therapists. And in the bookkeeping sphere as well.
I also suggest to NOT register until you have to. $7500 is better in your pocket than in the ATO’s.