- June 1, 2019
- Comments: 0
- Posted by: user
Uber is looked at with some distrust by the tax man – so it’s important that you get your finances correct right from the start because the tax man really is going to have his eye on you.
Also, at the end of the day you are starting a new business and there are some pitfalls common to all new businesses that you want to avoid.
It’s really a huge time saver to just get an accountant to set things up for, advise you on what you need to do, set up your accounting system and to help you build your new business venture. An accountant is also a great way to maximise your earnings, deductions and navigate the perils of owning a new business.
Here are 7 money rules for an Uber driver to know about!
Do not even think about “cash in hand”. The ATO is always targeting any business that looks able to try the “cash economy”. It’s also looking at “sharing economy”. Uber will always cooperate with the ATO and your income is just too easy to track.
Register for an ABN and GST. You are not an employee of Uber. You are a contractor. So the requirements are much the same as any contractor. This might be more complicated for you if you are also registered for GST for other businesses. So it’s a good idea to get your accountant to help.
Set up a bank account just for your Uber earnings and expenses. Believe me, for more reasons than I can go into, this will save you a huge amount of hair pulling later.
Set up an accounting system. Wealthpath Accountants are Xero Bronze Partners and we recommend Xero but any online accounting software will do. YOU MUST KEEP RECORDS and online software is the easiest and most secure way to do so. This will not only be a huge lifesaver at tax time but is also an easy way to keep track during the year on how much you are earning.
Keep track of expenses. There are a whole range of deductions you can claim as an Uber driver – but not if you don’t have the receipts for them. Make sure you ask your accountant about allowable deductions and deductions peculiar to Uber as they can make a huge difference to what you have to pay the ATO.
As part of number 5, keep a logbook. There is an alternate method the tax office call “Cents per kilometre” but a logbook is much better for claiming deductions (although it is a lot fussier). If you use online accounting software then it’s possible to have the software track your mileage.
You won’t like this one – but keep back at least 30% to 40% of everything you make so you can pay the tax man at the end of the financial year. You might not need it all but you do not want to be faced with a huge tax debt you can’t pay off. Remember, you are probably doing Uber as a second job. So that extra income has the potential to bump up your income tax level – maybe be by quite a lot. But look on the bright side. The more tax you pay also means the more money you are making! And if you end up not having to pay all of that percentage – well what a great excuse for a holiday!