Starting to get on top of your finances can be scary and daunting but it doesn’t have to be, that’s where we come in! We want to educate and inform so that you can keep doing what you do and not stressing about tax.
There are a few ways to deposit cash into your bank account; through a Bank Teller, an ATM, or at Australia Post. Lots of our clients tend to use the ATM process as it doesn’t involve having to deal with tellers being nosey and asking questions!
In the end, as long as you are banking all your money- there shouldn’t be any issues. The ATO have the ability to look into your bank account so if they want to see everything they can.
The $10,000 rule means any deposits of this amount and higher need to be registered with the anti-fraud organisations AUSTRAC for them to keep record and help them to detect, deter and disrupt criminal and terrorist activity. So as long as your money is legal- don’t be afraid!
What is it?
An ABN is a unique 11 digit reference number linked to your personal TFN to identify the business you run. Individuals only get one ABN and you can run multiple businesses under it. All income and all expenses from your businesses under your ABN are recorded in your Individual Tax Return (ITR).
When you run a small business you work under your ABN. When you are an employee earning wages, you work under your TFN.
Will my ABN out me?
Your ABN is linked to your name, if someone searches your ABN they will see your name (unless supressed). When you apply for an ABN you have to list an ANSZIC code which is the job category you want your ABN listed under. We tend to use ‘performer’ or ‘entertainer’ but it can be something broader and can always be updated.
Will my return say I’m a sex worker?
There is a spot in your return for the businesses main activity and also a spot for how many businesses are run under your ABN. Therefore if you have two jobs, we put the one where you derive the most income. Again, we use Entertainer or Personal Services. The job code in the tax return is what the ATO compare your figures to everyone else with the same job code and look for major anomalies.
Tax is paid direct to the ATO either via Cash at Australia Post, via Bpay or using a credit and debit card. You can also make payment and set up payment plans using MyGov.
Unlike being on Wages, a sole trader is responsible for paying their own tax. The income you earn is before tax and money should continuously be put aside in another account for your upcoming tax bill.
For the first year of working under an ABN, you will pay your tax when we prepare and lodge your tax return. There are various due dates depending on when you lodge. The due date is listed on your Notice of Assessment.
The ATO will then (depending on level of income) enter you into the PAYG system- a way of paying smaller amounts of tax throughout the year. You can voluntarily enter but there is certain criteria you have to meet if you want to remove yourself from this.
It’s very important as a sole trader to always be thinking about tax. We strongly encourage everyone to have a separate account for putting money away throughout the year for their tax bill.
The only way to know how much to put aside is to first know how much you are earning. It’s best to base it on a percentage rather than dollar figure as your income levels may not be consistent.
As a guide, if you expect to earn…
Under $40K, we suggest putting aside 10% of income.
Under $70K, we suggest putting aside 15%-20% on income.
Under $100K, we suggest putting aside 25%
Anything over $100K, it’s best to get in touch early to track and plan throughout the year, and can be upwards of 35% of income.
The first rule of tax- you can only get refunded what you have paid that year. If you haven’t made a payment to the ATO- there is no refund to get. If you’ve paid $5K throughout the year, there is no more than that to get refunded.
Tax is calculated on profit- so if you’ve spent $20K on expenses, that reduces the amount of tax payable. Eg $100K income minus $20K of expenses = tax on $80K.
The more you spend on the business, that will lower the amount of tax payable, it does not result in a refund.
Note: if you have paid $30K tax during the year to the ATO- and at year end when we calculate your tax, you should have only paid $20K, then you will receive a refund.
There is one tax return for individuals. The standard wages, interest, Centrelink information, and then a business supplementary section.
Your taxable income is made up from Income plus Business profit.
Only if you have actually paid too much throughout the year – either from tax withheld from wages or through paying PAYG.
Maybe, maybe not. The only way to tell is to track throughout the year. If you check out www.paycalculator.com.au this is a guide as to how much tax you will owe- just enter your estimated taxable income and it will populate the figure.
Not ideal, but it happens more often than not for sole traders. The ATO are willing to work with you. They offer payment plans up to two years. The most important thing is not to delay any longer. Know what you debt is and work with us to create a budget to pay off existing debt, but also to put aside for the current financial year.
That’s ok! We have had clients come to us with 12 years overdue. The most important thing is you are getting them sorted. If you have a debt, we’ll work with the ATO for you to make sure your repayments are within your budget.
Yes. It’s the cost of living in this country. But do you know what your tax is used for?
- Welfare payments- had to go on Centrelink? Need assistance whilst you study- all of that comes from Aussies paying tax.
- Health- the Medicare system here is phenomenal- we can get treated for cancer, have babies, surgeries and doctor visits at no charge; paid for by taxpayers.
- Education & Defence – paid through taxes.
- New roads and railways
- Parks and playgrounds
- And more!
View our deduction guide here: https://www.flipsnack.com/empire20/empire-industry-deductions-booklet.html
Keeping receipts is the best way to prove that what you’ve spent money on was in fact a business expense should you get audited by the ATO. We offer our clients access to a Dropbox folder where you can upload receipts and bank statements to. The ATO has an app where you can snap photos of receipts to save for tax time. However you want to do it we suggest at least taking photos of your receipts because those small slips of paper get lost and fade pretty quickly.
