By Andrea McArthur
Tax time. Time to get serious. The count down to June 30 is on and we only have 5 days left. Now is definitely the time to start thing about your Tax. Below are some ideas to get you thinking about your Tax this year.
Organize Buy a filing system and commit to it, your filing system could be as simple as a physical accordion file or go digital with some financial software (there are many different programs on the market, just ask around and trial a few).
Decide your key spending categories, record your expenses and keep your receipts. You can even find software that will allow you to view your expenses as a colourful pie graph, how shocking. I have started organising myself for Tax time and I have decided on a few categories:
- Office expenses under $1000 - Office expenses over $1000 (which are deemed depreciating assets and can be depreciated over time, see below about the changing rules) - Client printing - Books - Professional memberships - Software - Stationery - Phone - Internet - Parking -Travel.
Here is the ATO Guide to claiming business deductions www.ato.gov.au
Save Use a percentage savings model and stash some cash away for the Tax man. As a newbie freelancer my annual income is relatively unknown. Instead of continuing a back breaking savings plan or changing my name and going into hiding at Tax time I like to squirrel away some income as it comes in. I put away 30% of any freelance income into an online high rate savings account specially for Tax. This should cover my tax with deductions already considered. If you are registered for GST I am told that this percentage will be slightly higher approximately 35%.
Hire I am a professional in my field not a Tax accountant, I know this and that is why I believe that I should hire a professional in the field of Tax accountancy. I am two years new to Brisbane and so I am still growing my network of people. I am one of those that asks who your mechanic is and who you get your hair cut by. It's no different with accountants, I recently asked a good friend who has been freelancing for much longer than myself who she uses or recommends as a small business/self-employed specialist accountant.
I have a list of questions to ask when I see the said accountant, I have been putting off the visit because once I do I know I need to get real. Your accountant should ideally prepare your tax, give you some tips on your allowable deductions and help you prepare for the next financial year. In most cases, the savings the accountant will find for you will more than cover their fee, plus you can rest assured you haven't made any big mistakes.
Plan Eeik, yes we all need to think about where we have come from and where we would like to go in this freelancing world. Projected income is a tricky issue to tackle but setting yourself some financial goals for next year will help you feel more satisfied and motivated to network.
Try this form for setting next years financial goals: www.marketingmixblog.com
Think about if you are going to register for GST in the next financial year if you haven't already. Currently you only need to register for GST if you earn more than $75,000. Apparently though if you’re not registered for GST you can still claim a tax deduction on the cost of goods and services (inclusive of GST), as long as they are essential to your business. For instance I purchased a new iMac this year and can claim the tax back on that.
Research Tax rules which effect Small Businesses in Australia are changing from 1 July 2012. There will be significant changes to business expenses over $1,000, business vehicle purchases, the entrepreneurs tax offset and Superannuation contributions for over 50's.
If you are thinking of making some last minute business purchases hold off making any purchases between the cost of $1,000 to $6,500 until next financial year for a 100% write off in 2012/13 tax year. If you earned less than $50,000 this year be sure to enquire about the 25% entrepreneurs tax offset which is available for it's last year.
See more details here: www.thefinanceguru.com.au
My goal for the next financial year as a freelancer is to organise my financial life better in order to avoid the last minute "end of financial year" scramble. I am confident that this years trip to the accountant will be a positive exercise which will help me set myself up for the next financial year to come.
(Note: please double check all advice stated before acting.)
Andrea McArthur has a passion for all things visual and a soft spot for organisation. Type is her true love and goes weak at the knees over beautiful design. Andrea works as a freelance graphic designer in Brisbane by day and lectures in graphic design by night. You will find her sharing design related goodness via @andyjane_mc www.andyjane.com