- October 31, 2021
- Comments: 0
- Posted by: user
The first thing you need to do is consult your accountant or tax agent. There are a lot of questions you need to ask – but you won’t know what they all are. Your accountant will. For example, you might know what Goods & Services Tax is – but when and how do you register for it (and when does it become compulsory)? What kinds of tax deductions are there and what records do you need to keep to claim them?
This checklist is for a sole trader – a one person business. If you will be employing people or using sub contractors then there are a whole range of extra considerations that aren’t included in this blog. Again, consult your tax agent.
This guide is for Victorian businesses but all of the Victorian state resources in this blog have counterparts in most states in Australia. The state governments, local councils and the Australian Tax Office are gold mines of help and information and Google is your friend too (but be VERY careful that the information is reputable).
Do you need and licences or need to register for anything?
You can check on this on the Australian Business Licence and Information Service (ABLIS). HERE.
Tax deductions
Tax deductions for a home-based business basically fall into two types. Running expenses like electricity or an internet connection and occupancy expenses that can include rent, rates and even mortgage interest.
The Australian Tax Office have some handy guides: Claiming a tax deduction for expenses for a home-based business
Make sure you check the menu on the right hand side of the page for details on things like:
- Claiming a tax deduction for other operating expenses
- Claiming a tax deduction for repairs, maintenance and replacement expenses
- Claiming a tax deduction for depreciating assets and other capital expenses
There is also a page that includes a very hand “shortcut” method of claiming deductions – brought in because of COVID which is (only) available for this and the last financial year – FY 2021 and FY 2022.
For the shortcut method, click: HERE
Land tax
Under some circumstances home based businesses may have to pay land tax. Check out the State Revenue Office website HERE
Australian Business Number
You will need to register for a sole trader ABN on the Australian Business Register website: abr.gov.au
Keep business and personal separate
You will probably need to provide contact details for your customers. Try and keep personal and business apart. Set up a business bank account. Consider a separate, business phone number (you can get mobile phones that have dual SIM cards), a PO Box and an email address. Register a domain name and use it for your email address. Even if you don’t want to set up a website straight away – you almost certainly will at some point. And the domain name on that email address is free advertising. You also want to make sure no one gets the domain name you want before you do.
Basically, from the moment people find out about you they will be storing and (hopefully) passing around contact details. You really want those details to be the same from the first day right up to that glorious day in the year 2053 when you retire as a multi, multi millionaire.
Think carefully about the domain name. Short, sharp and memorable and evocative of your type of industry is what you want.
Trading Name
Which also brings us to the next point. Register a business name (or names) on the ASIC website (Australian Securities & Investments Commission). Register HERE.
An ABN is a unique identifier for a business. The business equivalent of the Tax File Number (TFN) that we all have. A business name is what everyone knows you by. For a sole trader, the name on the ABN is your name. But you can be known and trade by lots of names. Joseph Bloggs might be the name on the ABN but be trading as “Joe’s Plumbing” and “Joe’s Tiling” and maybe even “Joe’s Fencing”.
Insurance
Think about insurance. The normal home insurance you have might not be adequate if you are operating a business from home
There is a handy guide on the business.vic.gov.au website that you can read HERE.
Get good advice
It really is a good idea to discuss this with your accountant or tax agent. They can help with all of the above and also things unique to your particular situation or industry.