Home – New Forums Money matters Start up tax advice needed please. Reply To: Start up tax advice needed please.

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James Millar
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laramsay2012, post: 245509, member: 93908 wrote:
I haven’t started trading yet in my newly registered hair extension business which will be providing a service for application, maintenance and removal of tape hair extensions. I work full-time and am starting up doing this with the goal of having a couple of clients at least each Saturday to begin with.
I’m registered as a sole trader and don’t envisage that I will make anything near $75K so am holding off on registering for GST at this stage.

I am hoping that someone may be able to answer a couple of questions for me.

  1. Can the furniture, small of amount of stock and equipment that I’ve purchased for start-up be claimed at tax time?
  2. Is it viable to organise a wireless EFTPOS terminal for payment or should I just work on clients paying via PayPal or cash?

Many thanks.

Lucy-Ann
Got Hair 2.0

Hi Lucy

Dave is partly correct. The business expenses are claimed against the business income to produce a business profit or loss. If the assessable (gross) income from the business is less than $20k in the tax year, then any business losses will be quarantined and carried forward to offset against future profits or income. However, if the business exceeds $20k in gross income and still makes a loss then that loss can generally be offset against other income (including employment income). They are called “non-commercial loss” rules.

As you will be a small business entity (SBE), if you purchase fixed assets for the business prior to 30 June 2017 then any business asset under $20k can be immediately written off in the year of acquisition. Trading stock is not included in this rule and it is normally expensed when the products are sold. Again, if you are an SBE you can elect to apply simplified trading stock rules if the stock movement is less than $5k. That may allow you to immediately expense any trading stock as well.

For two payments, a week it may be easier to ask for cash. Check merchant fees and make an economic decision.

Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900