The significant problems in our life cannot be solved with the same levels of thinking with which we created them.
With 1 October rapidly approaching, business owners need to be thinking about how they will handle the GST increase.
B2B businesses generally have little problem other than making sure their accounting software can cope with the changes and that they understand how to complete the transitional GST return. Be alert to the effect of GST changes on existing contracts that carry over in to the new regime.
If your business is direct to consumers (B2C) things are more complicated:
- Will you increase all prices on the due date? If this is a big job you may want to put two prices on all stock starting now (pre-increase and post-increase).
- Do you have slow moving stock that you will want to hold prices on?
- Lay-bys outstanding will be at the old price and the GST increase generally cannot be passed on – this means a loss of profits to the business owner.
- Will you have a sales spike pre 1 October? And a sales decline afterwards? This is particularly likely with high value items. What will be the impact on cash flow if this occurs?
Many of these issues need decisions soon….
It is wise to check this with your accountant if you are unsure or send us a message through contacts and we will send you our information sheet.
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