Home – New Forums Starting your journey Do I need to create a business (name)?

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  • #984203
    Silenkurii
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    • Total posts: 8
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    Hello Flying Solo,

    I work full time in the IT sector as a graphic designer. Through word of mouth, I’ve been approached by someone who would like me to help them out by doing some graphic work for their company. I’m happy to oblige but I’m a bit nervous as I’ve never done any freelance type work outside of my 9-5 job.

    I just basically want to know what the process is here.
    *Do I have to register an ABN and business name to possibly only do one job? *What happens with tax?
    *Do I get in trouble if I only do one job a year?
    *Do I have to record everything I use just for the one job? Utilities, Fuel, Supplies etc?

    I’m just freaking out a bit because it’s something I’d like to have the option of doing (working after hours on my own clients) while retaining a full-time job. This may lead to more work, or, it may just be a one off thing and I guess that’s where it’s a bit daunting. I don’t really know anything about tax, business, invoicing etc. I just draw things! Haha. But it’s definitely something I’d like to know more about if this becomes a “thing”.

    Any advice is appreciated. Thank you all in advance.

    #1146410
    themoneytap
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    Hey,

    I think it may depend on the company, as they may only be able to pay you if you have an ABN, but then again I know a few small companies that pay through paypal, direct deposit and cash for once off jobs.

    Im not too sure on the rules for a hobby business and the threshold, as you can earn so much doing a hobby per year, something like 6k comes to mind?, but am not too sure with your case.
    If it were me and I could get repeat work doing freelance design id register a business name and get myself an ABN. Honestly, its really easy. You can do it either through ASIC, the government website, or use an online business that does it for you for a slightly higher fee. A business name and ABN will set you back less than $150 and all you supply is your personal details. They can do the hard bits and the name replication search for you.

    Are your expenses even going to be big enough for one job to record?

    I can help you out with startup stuff if you like :)

    Ben

    #1146411
    Anonymous
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    Hi Silenkurii,

    Welcome to the forum.

    How flattering that someone is so keen to work with you.

    We have lots of very knowledgeable accountants around here. Hopefully one of them will be along shortly to offer you some general advice about your situation.

    Good luck with it all,
    Jayne

    #1146412
    kathiemt
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    Hi and welcome. You do not have to register a business name. You can operate under your own name and there’s no problem with that. If you registered a business name then you’d probably have to set up a corresponding bank acount, etc which may be more trouble than it’s worth at this stage.

    However I would register for an ABN. It costs nothing but your time online to do this. I’m sure that any accountants who see this message will probably add their advice for you too.

    Congrats on the request. From small things….

    #1146413
    Divert To Mobile
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    Hi Silenkurii,

    It doenst sound as if your intending on building a business, so it would be classified as a hobby.

    Steve

    #1146414
    Silenkurii
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    Thank you everyone for your opinions and helpful advice.

    I do actually have a business name that I used to use for buying web domains but I never ended up using them. I’ll look into the ABN number and see if I pass their criteria. I remember looking at it last year and there were all these questions that, if answered honestly, wouldn’t let me have an ABN. They seriously need to reword some of those questions for laymen like myself!

    The government wants more people to start up small business but then puts the fear of god into you by stating on there that any false information can basically get you prosocuted.

    #1146415
    JacquiPryor
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    As Kathie mentioned, the ABN is free (you can apply at http://www.abr.gov.au) so if you are eligible you should obtain one. The company that has approached you may request it in order to pay you. They may even request an invoice from you, which should quote your ABN.

    As also mentioned, you don’t have to register a business name – you can simply use your own name. However, if you use anything other than your own name you’ll need to register through ASIC.

    As far as tax is concerned – well basically anything you earn that’s attached to your ABN needs to have tax paid. Kind of like your current employer withholds tax from your pay, you’ll need to pay tax on any additional income – so, make sure you are quoting a rate to this company that is enough to cover your tax, as well as any additional things you want covered (superannuation for example)… If it’s a once off tiny job it won’t matter too much, but if you do more work you don’t want to be left with a huge tax bill at the end of the year.

    I suggest you do keep a good record of everything you use/spend on the job, as all of these things can be used as tax deductions at the end of the financial year to reduce the amount of tax payable.

    #1146416
    Silenkurii
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    • Total posts: 8
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    JacquiPryor, post: 167963 wrote:
    As Kathie mentioned, the ABN is free (you can apply at http://www.abr.gov.au) so if you are eligible you should obtain one. The company that has approached you may request it in order to pay you. They may even request an invoice from you, which should quote your ABN.

    As also mentioned, you don’t have to register a business name – you can simply use your own name. However, if you use anything other than your own name you’ll need to register through ASIC.

    As far as tax is concerned – well basically anything you earn that’s attached to your ABN needs to have tax paid. Kind of like your current employer withholds tax from your pay, you’ll need to pay tax on any additional income – so, make sure you are quoting a rate to this company that is enough to cover your tax, as well as any additional things you want covered (superannuation for example)… If it’s a once off tiny job it won’t matter too much, but if you do more work you don’t want to be left with a huge tax bill at the end of the year.

    I suggest you do keep a good record of everything you use/spend on the job, as all of these things can be used as tax deductions at the end of the financial year to reduce the amount of tax payable.

    Thanks for the reply, Jacqui. That pretty much echoes what the tax agent said at H&R Block this morning. I’m still on the fence as to whether I register as a Hobby or Business though.

    If I register as a Business and only do 1 or 2 jobs for the year, well, it’s not too good. However if I register as a Hobby, then 1 or 2 jobs is fine. However again, if I DO register for a Hobby ABN and all of a sudden work floods in and I end up doing 50 jobs, what then? Can I upgrade my ABN details? Do I get thrown in tax jail? (haha)

    #1146417
    Matt@TheSummerProject
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    If it is literally just once or twice a year then it may not be worthwhile, however a few reasons you may consider getting an ABN:

    • It is ‘more usual’ and therefore easier for your client, and it is no explicit cost to you to register. This will make you more attractive for future work as you won’t be ‘the exception’
    • If you have any costs associated with your work, you may be able to claim input tax (GST) credits for those costs

    The following website seems to have reasonably well laid out and simple explanations of the requirements for GST – http://www.gstaustralia.com.au/.

    Good luck!

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