In such a scenario, compliance is no longer a choice but a mandatory requirement. As a small business owner, it is helpful to understand what needs to be done to stay ahead of the curve.
Inability to generate and consequently not being able to manage working capital effectively leads to slowdown in growth for many small businesses. GST affects working capital as well. The trick is for you to understand how and then also to find a way to use the same to your advantage.
Managing Your Working Capital:
Earlier, there was a limit to what the business owner could claim as credit, especially for money that was spent on overheads. Under GST, this concept of input tax credit has been broadened. So, now you can claim input tax credit on all tax paid for services used for furthering of business. Thus, cost of operation will go down and margins will increase. The bottom line, you will need to understand input tax credit quite well.
One of the biggest changes under GST is that the process of taxation and compliance has been made online. Given that invoice matching is critical to GST, investment in technology as well as capacity of staff are things that you will need to invest in big time. In addition to this, you can also look at purchasing some compliance software that will make the task of filing much easier.
To play the game well and stay ahead, you need to invest time and get involved to fully understand the implication of GST and how it will affect your business. Rules of compliance should be thoroughly considered and all required transitions should be expedited. It will make sense for you to get a good tax consultant on board who can offer advice and complete transition of any sort of implications under the new guideline.
The GST game, as we are calling it, will open a world of opportunities for you as a small business owner. It will allow you to play on the same field and market along with much bigger businesses. By the opening of this platform you will be able to compete with the big boys. One of the rules to stay ahead in the same thus, would be to bring out your most dynamic strategies and leverage the competition to your advantage, the best that you can.
When it comes to the overall effect of GST on small businesses, there are both pros and cons. As a business owner while it will be easier for you to start a new business with better and more streamlined logistics as well as faster delivery of services, there is also the downside of compliance costs going up.
Given that the tax reform has only just come into implementation, whether the effects of it are going to be more positive or negative remains to be seen. Your business needs to be GST ready and that is a reality. There are steps that you can take to ensure that you are optimizing the benefits and navigating the challenges effectively. Other than that, the larger overall scoreboard of this GST game is yet to come to the fore.